The British pound is flat against the euro on Wednesday.
- Germany’s Scholz says don’t expect another lockdown
- Eurozone and UK CPI meet expectations
- Germany to ban large events until October
- Pound-euro exchange rate is +0.15% this week
GBP/EUR was lower by 2 pips (-0.02%) to 1.1160 as of 3pm GMT.
The currency pair fluctuated between 1.114 and 1.118 and was little changed by the afternoon. Yesterday it gained +0.31%.
GBP: Pound steady as US virus infections rise
Range-bound trading in this exchange rate continues to be the order of the day. International geopolitical flare ups between India and China as well as between North and South Korea on top of rising coronavirus cases from Beijing to Texas are not moving the euro relative to the pound. Neither the Eurozone nor the UK is more affected by these events than the other.
There was nothing to distinguish the two economies when it came to consumer price inflation. Eurozone May core CPI printed at +0.9% versus +0.9% y/y preliminary estimates. UK May Core CPI was +1.2% vs. +1.3% y/y expected. Ping-ponging petrol prices have disguised underlying trends in inflation so economists are watching core prices to determine which central bank could lift its foot off the stimulus pedal first.
EUR: Consumer price inflation steady
On Wednesday, German Finance Minister Olaf Scholz echoed (if not intentionally) the message from US President Trump that if there were to be a second wave of the coronavirus- a lockdown in the order of the first one would not happen in Germany. The political price is too high to pay for politicians from the economic fallout of putting so many people out of work a second time over.
Putting aside the day-to-day swings in the currency, the long term direction of the euro could be heavily affected by the establishment – or not – of the EU Recovery fund. Today a French official cited by Bloomberg suggested a deal could be in place by next month. Apparently France is ready to have discussions on EU rebates and France’s ‘absolute priority’ is to have EUR 500 billion in grants.
