GBP/EUR Exchange Rate Rangebound as Markets Await PMs Coronavirus Announcement
The Pound to Euro (GBP/EUR) exchange rate is stuck in a narrow range so far this morning as markets brace for the announcement of new coronavirus restrictions in the UK later in the day.
At the time of writing the GBP/EUR exchange rate is trading at €1.0908, virtually unchanged from this morning’s opening rate.
Pound (GBP) Faces Possible Sell-Off Depending on Government’s Coronavirus Restrictions
The Pound (GBP) may be vulnerable to some selling pressure later today as Boris Johnson is set to lay out new coronavirus restrictions in the UK.
Current reports suggest that the government is set to impose a 10pm curfew on restaurants, pubs and other hospitality venue as well as asking those that can work from home to do so.
Plans to allow spectators at sporting events will also be paused.
So far the restrictions being introduced seem relatively modest in scope, and while they will have an impact on the UK’s economic recovery, it could allow Sterling to escape with only minimal losses.
However the full extent of the government’s plans are still unknown, with Johnson set to announce the full measures in the House of Commons later this afternoon, followed by a televised address to the nation at 20:00 BST.
This certainly leaves scope for the Pound to face additional pressure should additional measures be announced or the PM suggests that these restrictions could be in place through the entire winter.
Euro (EUR) Capped by Europe’s Coronavirus Woes
At the same time, the Euro’s (EUR) upside potential appears limited in light of concerns over Europe’s coronavirus resurgence.
EUR investors are also bracing for more restrictions to be announced by Eurozone countries in the days to come as a second wave of infections sweeps across the continent.
The World Health Organisation (WHO) warned last week that Europe faces a ‘very serious situation’ and that the spike in cases was a ‘wake up call’ for authorities.
Deutsche Bank analysts said in a note earlier this week:
‘Expect lots more restrictions over the days and weeks ahead, especially in Europe. The fact that the virus is already spreading quite rapidly is a big worry.’
EUR investors may also be reluctant to make any big bets ahead of tomorrow’s Eurozone PMI release, which is expected to show that the bloc’s economic recovery continued to run out of momentum this month.