The British pound is higher against the euro on Friday as the pound built on its recovery since the Bank of England cut interest rates to a record low while the broader mood in markets was tentatively better.
GBP/EUR was higher by 233 pips (+2.17%) to 1.1624 with a daily range of 1.0707 to 1.1116 as of 3pm GMT.
Pound versus Euro rallied 300 pips to over 1.10 after having been close to 1.07 at the start of the day. Losses for the week now stand at -0.71%.
British pound aided by BOE rate cut
It was starting to look very ugly for the British pound, which fell to new post-Brexit lows (excluding the flash crash) against the euro. Still Sterling has staged a significant recovery at the end of the week after some pronounced selling pressure. Sentiment has improved since the Bank of England slashed interest rates and renewed its quantitative easing program.
The new measures from the Bank of England came a day after Rishi Suank’s Treasury announced an expanded £330bn fiscal response to the like coronavirus-induced downturn.
Fears of a UK recession remain in place, particularly if there is not going to be an EU trade deal ready by the end of the year. The EU’s Brexit trade negotiation Michel Barnier announced he had COVID-19 and was self-isolating and UK’s trade negotiator David Frost also self-isolated, presumably due to his contact with Barnier.
Euro dips as market mood improves
The euro was higher against the dollar on Friday was unable to translate those against the pound which was seeing a powerful rebound following a big rout mid-week.
The European Central Bank responded to questions about whether it had an empty toolbox to tackle the crisis with a massive new 700 billion euro quantitative easing program. QE barely helped the Eurozone economy the first time around so it is unlikely to this time but it has help unclog some of the financial plumbing, including spiking Italian bond yields that were diverging with other sovereign yields that have almost all been heading lower as investors flock to the safety of the bond market.