The Pound is extending losses against the Euro for a fifth straight session.
The Pound versus Euro exchange rate tumbled through €1.13 on Thursday to hit a 5-month low of €1.1219, before declining to US$1.1185 a fresh 5-month low on Friday. The Pound is on track to lose 1.5% across the week in its fourth straight week of losses against the common currency.
At 06:45 UTC, GBP/EUR is trading -0.2% lower at €1.1219.
Coronavirus & Brexit Weigh On Pound
The Pound was hammered in the previous session against a number of currencies, the “safer” currencies, such as the Euro, US dollar and Japanese Yen. However, sterling still managed to advance against the riskier perceived currencies like the Australian Dollar and the Krone. This suggests that sentiment is driving the market and the pound is losing ground to the euro on coronavirus safe haven flows.
The UK has now entered the delay stage in response to coronavirus following a huge leap in the number of cases. UK Prime Minister Boris Johnson, in a speech lasts night said that as many as 10,000 people in the UK could already be infected.
The delay stage will involve more social distancing measures, such as a stronger message to work from home. However, England is not going as far as Scotland and Ireland which are banning large scale public meetings. The message from Boris Johnson compared to the rest of the world is still fairly tame.
Euro Rises vs GBP On No ECB Rate Cut
The EUR pushed higher versus the pound in the previous session after the European Central Bank decided not to cut interest rate. The broad expectation heading into the meeting was that the ECB would follow in the footsteps of many other major central banks and cut interest rates, even if by 10 basis points.
Instead the ECB opted for smaller more targeted measures, such as adding to the bond buying programme. It’s definitely worth mentioning that the ECB toolkit was rather bare to start with.
Euro investors will now turn their attention to the Eurozone Group meeting next week. Investors will be watching closely for signs of coordinated fiscal easing. Prior to that, German inflation data is due to be released today. However, there is a good chance that investors will shrug off the reading given that it doesn’t take into account the escalation in coronavirus cases from the end of February.
