The British pound is down slightly against the euro on Monday.
- UK government creates traveller chaos with Spain quarantine
- Euro benefits from ongoing recovery fund optimism
- US dollar weakens (EUR/USD > 1.17)
- German July IFO business expectations survey tops expectations
GBP/EUR was lower by 20 pips (-0.18%) to 1.0952 as of 3pm GMT. Last week the pound-euro exchange rate dropped -0.21%.
The currency pair chopped around in directionless trade between 1.094 and 1.098, finishing the day closer at the bottom end of the range. On Friday, it had gained slightly by 0.06%.
GBP: Spain travel restrictions weigh
The pound notched up a third successive weekly decline against the euro last week, following a late drop on Friday, erasing a temporary weekly gain.
Ongoing optimism about the new EU budget and 750 billion Recovery Fund is supporting the euro against most major currencies. The deal has not been officially signed off by the 27 member states but that is expected shortly.
From a UK perspective, the last minute addition of a 14-day quarantine requirement for UK travellers returning from Spain dragged on Sterling. The Brits are one of the biggest proportion of holiday travellers across Europe, and Spain is the single most popular destination. The new rules are a headache for the UK tourism industry, which was just seeing some green shoots after a return to business from lockdown conditions
EUR: Recovery fund still supporting euro
The euro has been rising for seven days in a row versus the US dollar, with a similarly positive performance against other currencies, including the pound.
The successful agreement of the European recovery fund negotiation is being seen as a game-changer for the single currency. At the same time, the US, at least based on the number of cases, is handling the COVID-19 pandemic much worse than European economies, where many have returned to some state of normalcy.
Generally positive German IFO data for the month of July underpinned the euro-strength. The business climate index rose to 90.5 when 89.3 was expected, while expectations rose to 97.0 when 93.4 was the median forecast.