Euro Pound Sterling (EUR/GBP) Exchange Rate Rises on Upbeat German Investor Mood
The Euro Pound Sterling (EUR/GBP) exchange rate edged 0.5% higher, leaving the pairing trading at around £0.8778.
The single currency rose this morning after data revealed that the mood amongst German investors improved slightly.
ZEW’s data showed concerns about the impact of coronavirus eased in the bloc’s largest economy in April.
Investors sentiment rose from -49.5 to a better-than-expected 28.2.
In a statement, ZEW President Achim Wambach said:
‘The financial market experts are beginning to see a light at the end of the very long tunnel.’
Pound (GBP) Plummets as Oil Prices Fall to Historic Low
Tuesday saw investors remain cautious after Monday’s historic plunge in US crude futures, plummeting below $0.
This caused traders to move away from riskier currencies such as the Pound, and towards the safety of the US Dollar (USD).
Commenting on this, Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney said:
‘Oil is off its’ lows, but a lot of companies are going to get hit and companies could start to fail.
‘If share prices have a pullback, the dollar could see some gains as a safe haven. The only thing that’s capping the Dollar is that the Federal Reserve has done more quantitative easing than anyone else.’
Meanwhile, the coronavirus pandemic remains in focus as member of the European Union are struggling to reach an agreement on how to financially support the hardest-hit countries.
Analysts have said if the bloc does not reach an agreement this week, it would mean further downside risks for the single currency.
Sterling (GBP) Slides on Early Signs of What’s to Come for UK Economy
On Tuesday, the Pound edged lower against the single currency after data showed the number of people in work in the UK grew at a slower pace in February.
GBP struggled to make gains as this was likely an early sign of what’s to come for the country’s labour market due to the coronavirus lockdown.
The Office for National Statistics (ONS) also showed that the number of employees on payrolls in March slowed to 0.8% from 1.1% in the previous month.
Commenting on this, David Freeman, a labour market statistician at the ONS said:
‘These experimental statistics show a softening picture in March, but cover the month as a whole including the period before the coronavirus restrictions were in place.’
In other data, the ONS also reported an increase in the number of unemployment benefit claims, as claims rose by 12,100 in March.
While this was lower than the 172,500 claims forecast, the data reflects the situation in the country before the lockdown.
Euro Pound Outlook: Eurozone Consumer Confidence in Focus
Looking ahead, the Pound (GBP) could edge lower against the Euro (EUR) following the release of UK inflation statistics.
If inflation slumps further than expected in March, Sterling sentiment will remain under pressure.
Meanwhile, the single currency could suffer some losses following the release of consumer confidence data.
If the Eurozone’s flash consumer confidence slumps further than expected, showing the mood in the bloc is grim, the Euro Pound (EUR/GBP) exchange rate will remain muted.