Pound to Euro Exchange Rate Struggles to Hold Best Levels but Still Much Higher Today
The Pound Sterling to Euro (GBP/EUR) exchange rate has seen a surge in demand today. Amid hopes that Britain’s economy could benefit particularly strongly from a return to market normalcy, the Pound (GBP) is strengthening on coronavirus and Brexit hopes.
After seeing mixed, narrow movement in recent weeks, GBP/EUR has seen notably bullish movement this week so far.
GBP/EUR opened this week at the level of 1.1081. After brief fluctuations yesterday, GBP/EUR bounced higher. GBP/EUR continues to surge today and has sustained gains of over a cent already.
Earlier today, GBP/EUR touched on a high of 1.1250, the best level for the pair in over two months, since the beginning of September. At the time of writing, GBP/EUR is trending just a little lower in the region of 1.1229.
Coronavirus and Brexit developments are likely to remain the focus for the Pound to Euro exchange rate going forward.
Pound (GBP) Exchange Rates Surge on Coronavirus Vaccine Hopes
The Pound started out this week on a mixed note, but the British currency is surging higher today.
As markets continue to digest yesterday’s news of progress in a major coronavirus vaccine effort, this news is making investors more optimistic about Britain’s economic outlook.
Britain’s services sector has been hit particularly hard by the pandemic. News on the vaccine has been seen as a light at the end of the tunnel however, which combined with some signs of resilience in Britain’s job market is boosting Sterling.
According to Stephen Innes, Chief Global Market Strategist at Axi:
‘A vaccine could make the biggest difference to the economic outlook for those countries that have struggled the most, especially with large services sectors like the UK,’
Of course, rising hopes that the UK and EU are closing in on a Brexit deal are also boosting Pound support.
Euro (EUR) Exchange Rates Pressured by Concerning Eurozone Data
Hopes that the Eurozone economy would be able to weather the second wave of the coronavirus pandemic took a hit from the latest Eurozone data today.
Markets were a little less optimistic about resilient Eurozone confidence, after today’s economic sentiment data from ZEW fell short in both German and Eurozone stats.
Achim Wambach, President at ZEW, also believed the data gave reason to fear that Germany could be headed back into recession.
Pound to Euro (GBP/EUR) Exchange Rate More Likely to Sustain Advances if Brexit Optimism Rises
The Pound surged today, but is struggling to hold its best levels as uncertainties persist.
Analysts advised caution over the coronavirus vaccine news, as more complications are always possible. On top of this, the possibility of a no-deal Brexit continues to cast a shadow over the Pound outlook.
Still, with markets calming somewhat, the Pound’s outlook is likely to become increasingly focused on the Brexit process in the coming weeks.
The UK and EU expect to reach some kind of Brexit deal before the end of November. If hopes of a deal rise, the Pound outlook will rise as a well. A Brexit deal being confirmed would lead to a huge rise in demand for the Pound.
On the other hand though, if UK-EU negotiations go poorly and no-deal Brexit fears rise, the Pound is less likely to sustain this week’s advance attempts.
Euro investors, on the other hand, will look ahead to tomorrow’s speech from European Central Bank (ECB) President Christine Lagarde.
Any further data on how the Eurozone is weathering the second coronavirus wave will also influence the Pound to Euro (GBP/EUR) exchange rate.