The pound managed to claw back some of its strength yesterday, settling just above the 1.12 handle. Sterling hit its best levels since June 10 yesterday. With no major announcements anticipated today, as the Eurozone remains mostly quiet, GBP is likely to begin September in a positive light.
However, it’s unclear whether this upward trend will continue or whether its brief success will be short-lived.
The pound is currently trading at a rate of 1.237 against the euro according to Bloomberg at the time of writing.
This is above yesterday’s rate of 1.1186, which was below the 1.12 handle.
Michael Brown, Currency Expert at Caxton FX, spoke to Express.co.uk to provide exclusive insight into the current exchange rate.
He said: “Sterling rose to its best levels since June 10 against the common currency yesterday, buoyed by a broadly weaker dollar, and ECB jawboning of the euro, to gain just over 0.5 percent on the day.
“Today, with a quiet calendar in store, attention will be on whether the pair can maintain yesterday’s momentum, or whether trading above the 1.12 handle will be a mere flash in the pan.”
George Vessey, UK Currency Strategist at Western Union Business Solutions said the dollar is “capping” the pound to euro exchange rate from extending higher.
He said: “Despite plenty of good news being priced into the euro and speculative positioning being stretched, the dominant dollar-weak story continues to drive EUR/USD closer to the pivotal $1.20 barrier.
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“This is capping GBP/EUR from extending aggressively higher like GBP/USD has done over the past month.
“Data revealed that German inflation stagnated in August following the fall into negative territory in July, which confirms the deflationary impact of the coronavirus crisis on economies.”
He added: “Still, with the European Central Bank already undergoing large asset purchases and low CPI being a global phenomenon, these lacklustre inflation readings may not rattle the common currency.
“Meanwhile, German retail sales data drops in on Wednesday and for the overall Eurozone on Thursday along with final services PMI readings.
“EUR/USD is likely to bump into stiff resistance around the $1.20 level and is at risk of recoiling from that level.
“However, a clean break could trigger more stops and the climb higher may accelerate.
“It appears the path of least resistance may be lower from here though.”
Mr Vessey also mentioned that overall risk appetite remains elevated due to the hope of a coronavirus vaccine being produced in the future.
He added: “Furthermore, overall risk appetite remains elevated across financial markets as hopes of a vaccine for coronavirus are growing.”
Travel has remained uncertain in recent days following the UK’s weekly travel corridor review.
But for those looking for travel money, today’s rates from the Post Office look promising.
The Post Office is currently offering an exchange rate of €1.0778 for over £400, €1.0935 for over £500 and €1.0991 for over £1,000.
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