Pound to Euro Under Pressure Once Again

The Pound to euro exchange rate continues to struggle as Brexit talks are once again at a bit of a stalemate. In order for things to be concluded prior to the end of the year ideally a trade deal needs to be agreed by Autumn in order to be implemented by the end of this year.

With the Coronavirus pandemic slowing in the UK the Pound appears to still be suffering from the lockdown. The Pound Euro exchange rate has fallen from 1.15 two months ago to just 1.10 at the time of writing. During the last four weeks however, the GBPEUR exchange rate has remained in a relatively tight range during this time.

The economic data produce over the last few weeks has shown green shoots of recovery and a lot of the data has come out better than expected. However, with GDP having fallen by -20% the market has not reacted in the typical fashion as economic data worldwide has been under pressure during this unprecedented time.

According to official figures produced by the Office for National Statistics the number of workers on UK payrolls has fallen by almost 650,000 in the last three months. The figures however were not as bad as expected but still show cause for concern.

With the furlough scheme still in place unemployment is likely to rise towards the end of the year when companies look to redundancies once the furlough scheme is over. The ONS went on to state ‘this was the largest annual decrease since estimates began in 1971’. They went on to say vacancies are at their lowest level on record which is 23% lower than at its lowest level back in 2009.

European Central Bank Meeting and Impact on GBPEUR Rates

Later today the focus till turn towards the Eurozone as the European Central Bank are due to hold their latest monetary policy meeting.

With interest rate levels at their lowest since the Eurozone was formed there appears to be little chance of further interest rate cuts for the time-being. However, the key for GBPEUR exchange rates will come when the press conference is held and the subsequent statement made by the ECB.

Previously the ECB has stated it will do whatever is necessary to combat the pandemic to ensure there is stability maintained in the region so depending on the sentiment this could see further movement for the Euro and the Pound exchange rate forecast.

Greece’s Economy Struggling and Impact for Euro Exchange Rates

At the end of this week European leaders will hold a summit to discuss the latest Greek crisis. Following austerity measures put in place following the financial crisis over ten years ago the country has been struggling ever since. The real problem for the country is that they appear to be needing another bailout package once again and the issue for the Eurozone is to decide how to finance the deal.

We end the week with the latest inflation data due out for the Eurozone with the latest release of the Consumer Price Index. Inflation is a key indicator as to the strength of the economy so any signs of further problems ahead for the Eurozone could signal a bout of Euro weakness vs the Pound as we end the week.

As we go into next week the focus is likely to remain on the progress of lack of it for the Brexit talks between the UK and the European Union. It appears in recent weeks that when the talks move forward this helps to strengthen Sterling. However, when the talks appear to hit a stumbling block this has often resulted in Sterling weakness as it moves us closer to a no deal Brexit which could cause problems for the Pound vs not only against the Euro but against a number of different currencies.

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