The pound to euro exchange rate has plummeted today. GBP has fallen to a two-week low against the euro as Sterling battles with both the impact of coronavirus and crude oil prices. A collapse in the latter “resulted in a broader softening of risk appetite,” said experts.
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This caused the pound to drop against the euro yesterday.
Looking ahead at today, as ever, the coronavirus crisis captures the most attention.
There are currently well over 2.5 million cases of the virus reported globally.
A “further softening in sentiment” could see Sterling drop even further, experts have warned.
The pound is currently trading at 1.1326 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 struggled yesterday as a collapse in crude oil prices resulted in a broader softening of risk appetite,” said Brown.
“[This sent] the pound to a two-week low against the euro, briefly below the 1.13 handle.
“Today, with the data calendar relatively light, the coronavirus pandemic will remain the primary driver of risk appetite.
“A further softening in sentiment is set to pose further headwinds for the pound.”
Following the crash in oil prices yesterday, Sebastien Clements, currency analyst at OFX, added concerning the pound’s movements: “The pound lost its footing on Tuesday as it found itself fighting for the wooden spoon with the New Zealand dollar as the worst-performing major currency.
“The pound broke through the 1.23 handle against the US dollar for the first time since April 8 as investors flocked to it as a safe haven as oil prices plunged.
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“Just [yesterday] morning I spoke with an oil broker extremely worried about the future and direction of the industry – a lot is up in the air but we can expect that over the coming days, the US dollar will consistently outperform its major counterparts.”
Brexit is another subject that is set to impact the pound this week.
George Vessey, currency strategist at Western Union, commented: “This week the UK and EU Brexit negotiators will restart talks via video conference in an attempt to make progress on agreeing the foundations of their future relationship once the transition period is over at the end of this year.
“Sterling is vulnerable to downside risk if discussions don’t advance as it will increase fears of a no-trade deal Brexit.
He continued: “A positive tone from these talks will likely benefit the pound, but should disharmony appear to surface once again, this may weigh heavy on the already fragile sterling.”
“GBP/USD and GBP/EUR reversed course mid-way through last week and may extend lower if sterling sentiment sours.”
As well as labour market data being released this week, UK inflation drops in on Wednesday – though will likely be ignored,” said Vessey.
“Focus will be on the deeper declines expected from industry PMIs on Thursday.”
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