GBP/EUR Exchange Rate Edges Higher Despite Improving French Business Climate Survey
The Pound to Euro (GBP/EUR) exchange rate rose by nearly 0.2% today, with the pairing currently trading around €1.092.
The Euro (EUR) failed to gain this morning despite the release of September’s German IFO Business Climate report rising to 93.4.
However, with uncertainty over Europe’s growing Covid-19 problem, single currency investors have remained generally cautious.
IFO President Clemens Fuest was upbeat about the report, saying that the German economy is ‘stabilizing despite rising infection numbers’.
Fuest added that German companies had become more optimistic than in the previous month.
Today also saw the French business climate in manufacturing survey for September, which beat forecasts and rose from 92 to 96.
With the Eurozone’s second largest economy’s outlook being surprisingly bright, single currency investors have some reason for optimism.
Nevertheless, following reports that the Eurozone could fall back into a recession, the EUR/GBP exchange rate has remained subdued throughout today’s session.
Pound (GBP) Rises as UK Markets Brace for Chancellor’s Unveiling of Methods to Bolster British Economy
The Pound (GBP) edged higher today as UK markets are awaiting Chancellor Rishi Sunak’s unveiling of a new plan to protect British jobs and other methods to support the economy.
A Treasury source commented:
‘The chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein. Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.’
In UK economic news, today saw the release of the CBI Distributive Trades Survey for September, which beat forecasts and rose by 11%.
Today will see the Governor of the Bank of England (BoE) Andrew Bailey give a speech. Any dovishness about the British economy would weigh on Sterling.
The credit rating agency S&P slashed the UK’s economic growth forecasts. S&P said that Brexit was particularly ‘especially detrimental for the UK economy’.
As a result, Sterling could quickly fall if the outlook for the British economy continues to deteriorate.
GBP/EUR Outlook: Could Sterling Sink as Covid-19 Infection Rates Soar?
The Euro (EUR) could continue to dip this week as the US Dollar (USD) has claimed much of the safe-haven demand as the global economic situation looks increasingly bleak.
Furthermore, single currency investors will continue to assess Europe’s own Covid-19 situation. If the infection rate continues to climb, then EUR could suffer.
The Pound (GBP) could also slip this week if the UK’s Covid-19 infection rate continues to rise. As a result, Sterling investors would become more concerned about an extended recession period reaching, perhaps, into 2021.