- Euro Group Meeting
- Brexit Uncertainty
- U.K Economy Opening
Euro continues to strengthen against the British Pound seen by the EUR/GBP pair bottoming out of one-week lows. The rally comes ahead of a much-awaited Euro group meeting that could have a significant impact on the single currency rallying at the back of the European Central Bank’s Stimulus Plans.
The European Central Bank confirming an additional €600 billion as part of the Pandemic Emergency Purchase Program has helped fuel optimism about Eurozone economy recovery, post-COVID-19. The result has been a strengthened Euro that has helped steer the EUR/GBP pair close to three-month highs.
In contrast, Sterling Pound has continued to be weighed down by Brexit uncertainty, compounded by concerns as to whether the economy will bounce back from the COVID-19 pandemic. A push back on the reopening of U.K retailers as well as hairdresser’s pubs and restaurants to June 15 continues to take a toll on Pound Strength against the Euro.
However, the Sterling Pound continues to benefit from ongoing U.K-EU negotiations. Prime Minister Boris Johnson committing to negotiating until the end of the year has helped fuel optimism of the U.K reaching an agreement to avert a hard BREXIT. Sterling Pound strength against the Euro will depend a great deal on Downing Street actions regarding the COVID-19 lockdown going forward.
Any signs of easing should prove positive for the Pound. Continued lockdown, on the other hand, should lead to further contraction of the U.K. economy. For starters, the country’s housing industry is in turmoil, with estate agents being forced to lower price. Immediate data indicates that 32% of agents reported lower prices may be compared to 22% in April.
A weakened Pound at the back of a resilient Euro should help support a rally of the EUR/GBP pair back to three-month highs.