The British pound is lower against the euro on Thursday.
- ECB increases PEPP bond buying by €600 billion
- Germany agrees €130 billion stimulus package
- Spain plans late June tourism reopening
- EU/UK negotiators to make statements tomorrow
GBP/EUR was lower by 72 pips (-0.64%) to 1.1118 as of 3pm GMT.
The currency pair traded around 1.12 until the afternoon when it slid around below 1.115 but held above 1.11. Yesterday the exchange rate fell -0.37% – leaving it unchanged on the week.
GBP: Awaiting Friday trade talk conclusion
Movements in the exchange rate were all about positivity in the euro rather than any negative events to work against Sterling. The pound has done a full turn this week, beginning with optimism for a post-Brexit compromise before those hopes were dashed.
The chief negotiatiors from the EU and UK sides are expected, like on previous occasions to offer their opinion on the status of the trade talks tomorrow. Expectations are low so any sign of agreement- especially on the hot potato issue of fisheries would be a positive surprise.
EUR: Bond buying and fiscal stimulus
The ECB announced Thursday it would expand the size of its emergency bond-buying program by €600 billion – totalling €1.35 trillion. It will also extend the duration of the program until at least June next year, or whenever the pandemic is over. The decision came off the back of weakening forecasts for the Eurozone economy. Although it didn’t say as much, keeping the cost of borrowing down for governments which are embarking on huge stimulus programs, including the possible joint-issuance of euro bonds- will have been another consideration.
Last night German lawmakers agreed a stimulus package worth €130 billion, including the requirement for all petrol stations to offer an electric charging station. The program is designed to accelerate the German economic recovery after a two-month lockdown brought activity to a standstill.
Adding to the good feeling, Spain – one of Europe’s top tourist destinations – and also one of the previous virus hotspots plans to reopen land borders with France and Portugal on June 22.
