The pound “slid” for a third day straight yesterday after the euro saw a welcome boost from the EU’s recovery fund agreement. Initially, the pound spiked at the beginning of the week but has since plunged against the stronger euro. Today, Purchasing Managers Index (PMI) surveys will determine the speed and extent of economic recovery which could have an impact on the exchange rate.
GBP is now struggling to claw its way back over that 1.10 handle since Tuesday.
The pound is currently trading at 1.0975 against the euro, according to Bloomberg at the time of writing.
This is below yesterday’s rate of 1.0999.
Michael Brown, currency expert at Caxton FX, spoke to Express.co.uk regarding the latest exchange rate figures this morning.
Pound to euro exchange rate: Sterling ‘slides’ for third day in a row
Pound to euro exchange rate: GBP is now struggling to claw its way back over that 1.10 handle
He said: “Sterling slid to a third straight loss against the common currency yesterday, remaining below the 1.10 handle, as risk sentiment soured amid an escalation in Sino-US relations.
“Today, for both sterling and the euro, this morning’s PMI surveys are the data highlight, though their usefulness in gauging the speed and extent of the economic rebound is somewhat questionable.
“As such, GBPEUR is more likely to continue taking its lead from shifts in risk appetite.”
PMIs are based on a monthly survey of supply chain managers across 19 industries, covering both upstream and downstream activity.
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They measure the direction of economic trends in manufacturing.
China-US relations continue to impact sterling as the relationship between the two heavyweights dwindles.
Yesterday, the US Secretary of state Mike Pompeo called on nations to triumph over the threat of “new tyranny” from China.
The speech was controversial and likely worsened the already fraught relationship between the two nations.
Pound to euro exchange rate: China-US relations continue to impact sterling
George Vessey, UK Currency Strategist at Western Union Business Solutions said that rising fears of a trade deal not being made between the UK and the EU are also impacting the pound.
He said: “Sterling currency pairs, excluding the US Dollar, retreated yesterday because of the ongoing uncertainty about UK-EU trade talks and rising fears about a no-trade deal scenario by year-end.
“GBP/EUR remains under pressure but is battling to stay afloat the €1.0990 mark to avoid a significant downturn.
“Fears regarding Brexit are growing amid the pessimistic tones surfacing from London and Brussels.
“EU negotiators feel that the UK is avoiding engaging on the big issues, which is keeping the talks in deadlock.
“Meanwhile, hopes of a trade deal between the UK and US this year have almost been abandoned because of the US election this November.
“Of course, coronavirus is likely consuming most of the resources and energy in the EU and US, so trade deals with the UK may not be getting the attention the UK hopes for.
“As it stands, the pound remains resilient with GBP/USD climbing further north of $ 1.27 today, though GBP/EUR remains sub-€1.10.
“If a no-trade deal Brexit does play out and a UK-US trade deal isn’t in place either, then sterling is expected to fall quickly back to levels witnessed in the height of the coronavirus crisis in March.”
The Post Office is currently offering a pound to euro exchange rate of 1.0600 for amounts over £400, 1.0754 for amounts over £500 and 1.0809 for amounts over £1000.