Euro to Pound Exchange Rates Reach a 6-Week Low
The euro has been giving up ground against the pound recently with the currency pairing hitting a 6-week high yesterday at a peak of 1.116 not seen since 12th July. The pairing, which over the past few months has purely resided within a 2-cent spread between 1.09 to 1.11, is etching its way up to the 1.12 figure.
It comes at a time where Germany, the economic powerhouse of the Eurozone, had seen a April-June Q2 GDP contraction of 9.7% which has led to rising unemployment and salary cuts following the reduced financial output. More positive news from Germany has since been announced today where the government, following a 7-hour negotiation period yesterday, have agreed to extent the job scheme to the end of 2021 to keep supporting coronavirus-affected individuals who have either been made redundant or have contracted the virus. This is looking to help cushion the economic impact the pandemic has generated but think tanks are predicting that this installment may cost the Germany treasury another €10bn.
This could turn the tide on the encroaching pound against the euro as the UK equivalent – Job Retention Scheme – is looking to be wound down in October unless intervention through Finance Chancellor Rishi Sunak is made. This is expected to cause a steep rise in employment with figures predicted to move to 10% for the UK this year according to the World Bank and may see the euro regain its lost inroads in recent weeks.
EUR/USD Sees 1.18 Rate Plateau
As was previously predicted when the ever improving euro to US dollar exchange rates touched the 2.5-year high of 1.118, the euro over the past 3-4 weeks has remained relatively unchanged. This seems surprising considering the vast afflictions the pandemic has had on the US as it stands as the hardest hit country globally with around six million cases and close to 200k deaths. In contrast, the uncertainty the US faces from the virus is also going to continue into the political sphere with the US presidential elections coming up on 3rd November. With the competing front runner Joe Biden ahead of the current President Donald Trump in the polls, the US dollar could experience some weakness from this multi-faceted complexity.
Shaky Data Predictions for the Bloc Could Create Euro Slump
The euro is set for a potentially bumpy road next week as the single-currency is set for a plethora of reduced-output, bearish market data. Although it has been very quiet this week with no European releases coming in which had caused any currency volatility, next week will be more exciting, for Germany in particular.
To start the week the German Harmonized Consumer Price Index (CPI), which for July was unmoved at 0% could shift slightly more positively to 0.4% predicted by FX Street. However, the Eurozone in general on Tuesday is expected to see its CPI drop marginally from 1.2% to 1%. Retail sales could also be on the slide too as Germany’s figures for August could see a sharp decline from 5.9% the previous month to 3% which is to be announced Wednesday. Thursday, lastly, will see another overall representation for retail sales by the group which is predicted to contract from its 1.3% levels to recession-like territory at -0.5%. Retail sales have been an interesting one for Europe as from a UK perspective, online shopping from monopolies such as Amazon have seen retail sales flourish while it appears that the economic depression that Europeans are experiencing has stagnated the spending of its citizens more severely that its sterling-wielding counterparts.
Should these data releases come in as expected for Germany and indeed the Bloc, there could be further economic detriment to the euro in the coming months as the 27-member state group is struggling to come to terms with the current financial environment.
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The post Euro to Pound Exchange Rates Reach a 6-Week Low appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2020/08/euro-to-pound-exchange-rates-reach-a-6-week-low/
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