GBP/EUR: Pound Higher Versus the Euro As Brexit Clock Ticks Down

Risk off trading remains front and central as the new week begins. Selling interest surrounding the euro looks set to gather steam amid a rise in the number of coronavirus cases in Italy and amid ongoing concerns over the health of the eurozone economy. Lat week the euro sunk to fresh multi year lows of $1.0777 versus the US dollar.

EUR/USD is trading 0.2% lower at US$1.0820 at 07:00 GMT as it looks to target US$1.08.

Euro Fails To Hold Friday’s Gains

The euro is trending lower as risk sentiment remains under pressure giving up Friday’s gains. The rapid spread of coronavirus in Italy, where 152 cases have been confirmed and 3 deaths, is unnerving euro investors. Numerous public events have been cancelled including the Venice festival. 12 towns are on lock down and some business in the area, close to Milan have halt operations. Economists continue to attempt to gauge the impact that coronavirus could have on global economies, with exporter nation Germany looking vulnerable.

Attention will now turn to the German IFO Business Climate index. Analysts are expecting sentiment in the forward-looking index to tick higher to 96, up from 95.9. Strong data could help boost the euro following Friday’s better than expected PMI figures. However, any signs of coronavirus fears seeping into the data could drag the euro sharply lower.

US Dollar Remains Firm On Safe Haven Flows

The US dollar was a top performer among the major currency’s last week thanks in part to safe haven flows and thanks to solid fundamentals which showed the US economy to be broadly robust.

Safe haven flows are expected to continue as coronavirus fears dominate and after the G20 meeting of finance ministers over the weekend. The group digested a sobering presentation by the International Monetary Fund (IMF) which predicted that the coronavirus epidemic would take 0.1% off global growth.

Data wise, it is a quiet start to the week on the US economic calendar. With no high impacting figures due today, investors will look ahead to consumer confidence data tomorrow and durable goods and GDP figures later in the week.


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