The pound to euro and US dollar rate is once again under pressure, as global sentiment appears to be in decline and the risks of a second wave of Coronavirus appears to also be rising.
This has caused the pound to euro to fall to its lowest level since the third of March and at the moment there is little to be optimistic about Sterling.
The GBPEUR exchange rate has dropped below 1.10 on the Interbank level on Friday and has now touched the inverse rate of 0.91 at the time of writing.
Could lockdown measures return to parts of the UK?
News over the weekend that certain parts of the country may be placed back into lockdown has also caused concern. The government has hinted that it may be looking to lockdown areas if cases start to rise too quickly. The city of Leicester has been named and with this Saturday 4th July the first time in months that pubs and restaurants will allowed to reopen for the first time since the lockdown measures were put in place in March then there are fears that the virus may begin to spread once again.
Texas has halted its reopening of the economy after cases increased over the last few days but VP Mike Pence has also stated that they will provide full support in terms of state assistance to hospitals if the lone star state struggles to control the problem. According to Texas state governor Greg Abbott ‘the daily number of cases have gone from an average of about 2,000, to more than 5,000.’
Across the globe COVID-19 has seen in excess of half a million fatalities with millions more having also been infected. Without a real track and trace model in place globally the fears are that this figure could be as much as ten times more than what has been reported. With the fears of a second wave this is piling further pressure of pound Sterling exchange rates.
Indeed, turning the clock back to mid-March the FTSE 100 fell by a huge amount as Coronavirus increased its presence in the UK and further afield. With such a large amount of money held in the stock market in the UK form overseas a lot of this money was sold off and moved outside of the UK and this was on the major reasons for Sterling’s weakness during March. Indeed, the pound euro exchange rate hit its lowest level in twelve years. Meanwhile, the pound vs the US dollar dropped to its lowest level to buy US dollars with pounds since 1985.
Therefore, if a second wave does happen in the UK then we could see the economy halted once again so if you have a currency transfer to make in the near future then make sure you pay close attention to any signs that the virus is back on the rise.
Brexit Talks to Resume This Week
We only have two days left before the UK can ask for an extension to the current Brexit deadline of the end of this year. However, with Michael Gove having previously stated that the UK are carrying on with the timeline and Boris Johnson have spoken with Ursula von de Leyen any last minute for an extension tomorrow is highly unlikely.
Therefore, the talks are due to ramp up with more urgency as the discussions must be sorted in the next six months. The continued uncertainty is weighing heavily on Sterling exchange rates so I’d be surprised to see the pound maintain its value against the euro and the US dollar is the short term.
The talks are due to take place every week until the end of next month so depending on what progress is made during this time could have a big influence of the value of Sterling exchange rates. Prime Minister Boris Johnson has reinforced his message that he wants the talks to have progressed significantly by the end of the summer which will allow enough time for any amendments to be made prior to the deadline of 31st December.
With little economic data due out in the UK this week then all eyes will remain focused on the pandemic as well as the Brexit talks.
If you have a currency transfer to make and would like a free quote, or to discuss the above factors then contact me directly, I look forward to hearing from you.