The British pound is up slightly against the euro on Friday afternoon in a rebound from one-month lows hit earlier in the day. The euro is strengthening on the prospect of higher German government spending while BOE Governor Mark Carney has warned UK economic growth forecasts might be downgraded because of the coronavirus.
GBP/EUR was higher by 12 pips (+0.0.09%) at 1.1724 with a daily price range of 1.1663 to 1.1733 as of 1.30pm GMT. The currency pair had fallen early on in European trading to a one-month low, but losses stalled at 1.167 and the price recovered the 1.17 handle. For the week losses stand at -1.96%.
GBP struck a fresh one-month low against the euro on Friday
The single currency of the Eurozone has rallied throughout the week, making substantial gains against most major currencies, even those considered a haven from the coronavirus like the Japanese yen. Concerns about the affect the coronavirus will have on the UK economy, just as it tries to navigate its exit from the European Union have pulled the pound lower.
Outgoing BOE Governor Mark Carney said the coronavirus could mean a growth downgrade for UK. The timing of the Governor’s comments will be awquard for the Treasury which is putting together the next UK budget for March 11. The budget was first written before the UK general election but now might need to be adapted to the threat of the coronavirus and what that might mean for UK economic growth. Carney added that “the direction is down” when referring to the impact the virus would have on the UK via lower tourism and business activity.
While stocks markets have had their worst week since the financial crisis, it has been a good week for the euro. The global economy is under threat from the coronavirus and Germany is one of the better positions financially to be able to combat it with higher spending. The euro is off its weekly highs since there is not yet consensus in Germany about the fiscal response.