It has been an interesting week for GBP/EUR exchange rates, with the markets starting off fairly calm, we then saw a dip in the middle for the Pound and at the time of writing this the amount of Euros you would get for your Pound pretty much has ended the week where it started, with the interbank exchange rate sat in the 1.14s.
To round off the trading week we had news from EU chief negotiator Michel Barnier’s press conference that he still did not feel that the UK were fully engaging in talks and that there were still a number of sticking points that were far from being resolved. This didn’t impact the GBP/EUR exchange rate by too much but it is again another underlying current that hangs over the Pounds ability to make solid gains against the Euro.
It is still yet to be seen whether or not the UK will make a move to try and extend the deadline, which sees a departure with a deal or without come the end of this year. No deal Brexit has been a well known phrase over the past year or two and every time it gets a mere mention it seems to turn investors heads and leads to a drop in the value of the Pound. It seems for now Brexit talks are not at the forefront of investors minds but it is likely that should Covid-19 start to fade away from the headlines Brexit will be ready and waiting to step back onto the stage.
Economic Data Not Having the Same Impact at Present
Economic data released over the course of this week has been pretty poor for both the UK and Eurozone, with PMI data sets for the services sector in Europe showing a record low yesterday and manufacturing showing the worst levels in 134 months there are key concerns over how various economies within the Eurozone are going to negotiate their way through this.
Data from the UK and the US also disappointed, with UK PMI fell to a record low and came out much worse than analysts’ had predicted and US jobless claims rose by a figure of 4.4 million just last week alone! This puts the US employment figures back to where they were in 2009, and it would be surprising if there was not further bad news to come as the US is still showing a strong number of cases and deaths.
It does seem that a poor economic data release has come to be expected around the globe, therefore it isn’t having such a big impact as you would expect in normal market conditions.
All Eyes Focus on Exit Strategy?
A number of economists are now suggesting that exit strategies from the lockdown may well have a big impact on the value of currencies in the coming weeks. This is understandable as an economy that manage to jump out of the gates and get started up again quickly could really benefit the currency in question, and should others find that their strategy does not play out right and they have to lockdown again or to taper their progression then their currency may suffer accordingly.
Number of cases, deaths and progression with exit will likely be a big focus for the markets in weeks to come and with the UK, Italy, Spain, France and Germany being large focal points for this we may see a volatile period for Sterling Euro exchange rates.
For more information on GBP or EUR rates for an upcoming transfer, feel free to contact myself, Daniel Wright, using the form below.