GBP/EUR Exchange Rate Continues to Test Best Levels in Over a Year
Despite a lack of surprising upside developments in the Pound outlook, the British Pound to Euro (GBP/EUR) exchange rate continues to test new highs. Towards the end of last week, the pair was once again trending near its best levels in over a year. Investors have little reason to buy the Euro as the Eurozone’s coronavirus lockdown woes continue, but strong Eurozone data next week could help the shared currency to recover more easily.
After opening last week at the level of 1.1646, GBP/EUR saw mixed movement earlier in the week.
GBP/EUR briefly tumbled to a low of 1.1578, the lowest level for the pair since the beginning of March. The pairing spent the rest of the week climbing from that low though.
In fact, on Friday the GBPEUR exchange rate touched on a new high of 1.1714 – which was a best buy for the pair in over a year since early 2020.
Still, the Sterling-Euro continued to struggle to hold above the key level of 1.17, as it continued to slip back into the region of 1.16.
Pound Sterling continued to find support in fairly optimistic news and data towards the end of the week, which helped it to keep holding near highs against the weak Euro.
Thursday saw the Bank of England (BoE) take cautiously optimistic tone in its March policy decision. This was followed on Friday by stronger than expected UK confidence and public borrowing results.
According to Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics, things have been holding up well despite the lockdown:
‘Admittedly, the picture is flattered a bit by the relatively high level of self-assessment income tax and capital gains tax receipts in February, which refer to income and gains clocked up in the 2019/20 financial year. Even excluding these tax streams, however, receipts were down a mere 2.6%, similar to January.’
These factors all made it easier for the Pound to hold its ground against the Euro.
The shared currency continues to see mixed demand due to persisting concerns in the Eurozone outlook.
France has announced it will enter new lockdown, and Germany is considering extensions to current restrictions amid speculation that the Eurozone is facing its third wave of the pandemic.
On top of these concerns weighing on the Euro, the shared currency continues to be dented by strength in its rival currencies.
The Euro is often less appealing when currency rivals like the British Pound and US Dollar (USD) are stronger. Amid the Pound’s persistent strength lately, the Euro’s appeal has been limited.
Pound (GBP) Exchange Rates Could Weaken as Slew of UK Ecostats Due
The coming week will be a big one for the UK economic calendar. For now Sterling is buoyed by solid UK data and Bank of England (BoE) optimism, but if upcoming UK data disappoints then the Pound could lose some of its appeal.
Key UK data will be published throughout the week, starting with January job market data on Tuesday and inflation rate data from February on Wednesday.
Wednesday will also see the publication of Britain’s March PMI projections. If UK PMIs beat forecasts, they could indicate that Britain’s economy is handling the coronavirus pandemic well this month.
Friday will round out the week with UK retail sales results from February.
Strong UK data, especially PMIs and retail stats, could make investors more confident in Britain’s economic resilience and recovery momentum.
Another week of strong data could lead to yet another week of bullishness for the recently strong Pound.
GBP to EUR Near-Term Forecast: PMIs and Confidence Results Could Boost Euro Support
The Eurozone’s economic calendar won’t be quite as busy as the UK’s next week, but some key stats on the way could still influence the direction of Euro trade if they surprise investors.
Markit will publish its March PMI projections for the Eurozone on Wednesday. Amid concerns over the impact the coronavirus pandemic continues to have on the Eurozone, any surprising PMIs could have a big influence on the Euro’s strength.
Eurozone consumer confidence data from March is also due on Wednesday.
German consumer confidence will be published on Thursday, with French consumer confidence on Friday. German business confidence from Ifo is also due on Friday.
Amid speculation of further lockdowns in the Eurozone, developments in the coronavirus pandemic’s impact on Britain and the Eurozone will of course continue to influence the Pound to Euro (GBP/EUR) exchange rate throughout the coming week as well.