The pound to euro has struggled to shift this week as the first trading week of August gets well underway. Yesterday was a “rangebound” day for both the euro and GBP. However, sterling did “soften a touch” against the common currency, experts said.
Coronavirus continues to be a focal point of the market.
There are currently 307,256 total confirmed cases of coronavirus in the UK.
There have sadly been 46,295 deaths in the country.
Britain was once among the countries with the highest number of virus cases.
However, the US, Brazil, India, Russia, South Africa, Mexico, Peru, Chile, Colombia and Iran now all have more cases.
Looking ahead at today, new PMI data is due out.
Experts predict this will do little to bolster the pound, though.
The pound is currently trading at 1.1078 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 this morning.
“Sterling softened a touch against the euro yesterday, in what was largely a rangebound day for both currencies,” Brown said.
“The market continued to monitor the latest coronavirus headlines and negotiations over a fifth US stimulus package.
“The same factors are likely to drive price action today, with this morning’s services PMIs something of a non-event.”
Looking further ahead, attention is also likely to focus on the Bank of England’s (BoE) monetary policy meeting on Thursday.
George Vessey, Currency Strategist at Western Union, commented: “Although no changes to policy are expected to be announced, the BoE is actively reviewing the prospect of Negative Interest Rate Policy (NIRP), which would likely weaken the pound.
“For now, it seems more likely the central bank will await more clarity on UK-EU trade talks before implementing NIRP, although money markets are already pricing in negative rates for early next year.
“Final UK PMI surveys will also be released this week, with manufacturing PMI today expected to confirm the sector remains in expansion.”
Brexit continues to play a role, too, and Vessey pointed out that a trade deal could see the pound soaring.
“Both the UK and EU are keen to avoid a no-trade deal scenario, but investors have become more anxious that this scenario could eventually play out given the lack of time and resources amidst a global pandemic,” he said.
“However, Brussels may soften its demand that Britain follows EU rules on state aid in the future.
“The UK has so far refused to be bound by EU state aid rules, environmental standards or labour laws, but the EU have long demanded so-called “level playing field” guarantees from the UK if it wants to continue selling goods freely in the bloc.
“The progress has been met with cautious optimism though and talks may still go down to the wire. GBP/USD is expected to accelerate to the higher regions of $1.30 and GBP/EUR towards €1.20 if a deal is struck, but in the event of a no-deal, at least 10 percent could be slashed off sterling’s value.”
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