Pound euro exchange rate: GBP/EUR rises after Germany’s ‘dour’ economic growth report
This left many euro investors felling gloomy about the health of the Eurozone’s biggest economy going forward into 2020. Joshua Mahony, a Senior Market Analyst at IG, was also downbeat in his assessment, saying: “[Today’s] dour data fails to reflect any possible impact from the coronavirus, which could lead to a sharp contraction if fears over an Italian-led outbreak in Europe comes to fruition.”
The euro has also lost some of its safe-haven appeal since the outbreak of coronavirus reports in northern Italy earlier this week.
Chief Analyst at Nordea Markets Jon von Gerich said that the coronavirus now presents a bigger issue for the single currency than the pound, with the “EUR [being] closer linked to world trade”.
Meanwhile, the pound has benefited from being relatively detached from concerns over the coronavirus today.
Paul Meggyesi, an analyst at JP Morgan, commented that Sterling, as a consequence, “continues to perform idiosyncratically rather than as a traditional reserve currency”.
Brexit developments continue to restrain some of the pound’s gains, after Michael Roth, the German Europe Minister, urged the UK to “keep its promises” amid fears that the UK could backtrack on its Brexit pledges.
With rising concerns over whether the UK and the EU can secure a trade deal by the end of this year, market appetite for the pound remains fragile on fears of a no-deal by the end of the Brexit transition period.
Following today’s release of the EU’s negotiating mandate, Sterling traders have also remained in wait-and-see mode until the UK forwards its own outline for trade talks in March.
Michel Barnier, the EU’s Chief Brexit negotiator, left pound investors concerned, however, saying: “The pressure is not being put by us. The British government is putting the pressure of time on these negotiations”
Looking ahead, Brexit developments will continue to drive the GBP/EUR exchange rate this week, with any further signs of a divergence between the UK and the EU over trade proving pound-negative.
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