The pound to euro exchange rate fell on Monday but finally succeeded in “gaining ground” yesterday. GBP’s boost came as it “shrugged off rumours of an emergency Bank of England cut,” said experts. The weakening of the euro also helped sterling improve. So how could the pound to euro exchange rate shift today?
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According to experts, political developments will garner the attention of both the pound and the euro.
This comes as the first round of UK-EU trade talks reach an end.
The pound is currently trading at 1.1558 against the euro, according to Bloomberg at the time of writing.
Michael Brown, currency expert at international payments and foreign exchange firm Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures.
“Sterling gained ground against the common currency on Wednesday,” said Brown.
“It shrugged off rumours of an emergency BoE rate cut and instead benefitting from a weaker euro as the recent carry trade unwind appears to be coming to an end.
“Today, political developments will be the pair’s primary focus as the first round of UK-EU trade talks conclude.”
Coronavirus is also a huge concern in the UK and across the world. Has the deadly virus affected the pound to euro exchange rate?
Jeremy Thomson-Cook, Chief Economist at Equals (formerly known as FairFX), said: “International travel is already being impacted by the spread of coronavirus as flights are cancelled with bookings reportedly decreasing.
“Since the outbreak on December 31, the pound is down 3 percent against the euro and 4 percent against the US dollar, meaning both consumers with spring trips planned and businesses trading overseas will get less for their money compared to before the outbreak.
“The EU’s environment and public health committee are scheduled to meet on Thursday 5 March to discuss the global emergency of coronavirus and how member states are confronting the epidemic, and both economic and public interest in the discussions will remain high.
“In terms of currency, the euro remains the most vulnerable given its trade links with China and the sheer weight of disruption that will hit supply chains in the coming weeks and months, already evidenced in its fall of 1 percent against the US dollar since December 31 2019.
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“Whilst the pound is fluctuating, it looks relatively insulated for now given its reliance on the services sector as opposed to manufacturing, where production and supply are already being impacted as a result of the virus.
“The number of infections here in the UK remains low compared to other countries meaning fears and concerns over the economic impact of the virus are predominantly focused elsewhere.
“Fluctuations in the pound are likely to continue as a result not just of coronavirus but the unprecedented Brexit journey and more specifically trade negotiations as they continue over the coming weeks and months.
“Trade negotiations between the EU and UK commenced this week, and although they will continue for some time the outcome is likely to have a big impact on the strength of the pound.
“There is a huge opportunity for the pound to gain strength over the course of the transition period, although much work is needed for it to return to its pre-referendum heights which it has yet to return to.
“The markets will be keeping a very close eye on the pound’s reaction to any talks and agreements.
“Anyone whose travel plans are unaffected or who has a need for currency exchange needs to keep a careful watch on foreign exchange, buy when they see a rate they are happy with and avoid leaving it until the last minute in order to get the best value for their money.”
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