The pound to euro exchange rate has managed to stay above the 1.12 handle so far this week which, pushing it to a one-week high. Hopes for a coronavirus vaccine in various locations across the world has given investors more confidence. The pound is now currently trading at a rate of 1.1244 against the euro according to Bloomberg at the time of writing.
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Yesterday, the pound was trading below the 1.12 handle at a rate of 1.1191 percent against the euro.
Michael Brown, Currency Expert at Caxton FX, spoke to Express.co.uk to provide exclusive insight into the current exchange rate.
Mr Brown said: “Sterling gained ground on Tuesday, rising to a one-week high, above the 1.12 handle, as the pound rallied in line with a broad improvement in risk appetite; with investors becoming increasingly upbeat about the economic reopening and the prospects for a coronavirus vaccine.
“Today, those factors are likely to remain the main drivers of price action, with the data calendar presenting little in the way of impactful releases.”
However, despite the good news it seems the UK’s own economic strain is still very much the focus of discussion and has impacted risk appetite dramatically.
Current Foreign and Commonwealth Office (FCO) advice states that “all but essential travel” is prohibited.
This will continue to remain in place for an “indefinite” period of time.
The advice paired with the UK’s upcoming quarantine rules – set to begin on June 8 – has thrown the travel and tourism industries into a tailspin.
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Emma Coulthurst from price comparison site TravelSupermarket said that although there is a desire to travel, most people are not booking this year but for next year, meaning that the tourism sector in multiple countries could be set to lose more money.
She said: “We know that there is a pent-up desire to travel.
“We’re seeing people searching for holidays later in the year, October being the most popular month to look for a holiday.
“As the picture becomes clearer on the exact health protocols put in place at airports and on airlines and whether our Government and countries will let us travel, more people are likely to book for this year.
“Currently, though, we’re seeing more Britons hedging their bets on holidays next year”.
Chris Beauchamp, Chief Market Analyst at IG said last week that the economic situation in Europe is slowly improving.
He said: “While the situation in Europe is improving, according to PMI data, markets are looking tired once again.
“What was a straight-line move higher in late March has turned into a grinding contest of attrition between the bulls and bears, and while the buyers have the upper hand for now, expectations of a sharp pullback are on the rise.
“Having reiterated their ability to do more if needed, central banks have now little to do but wait to see how the data, both economic and infection rates, plays out; in this environment, modest improvements compared to last month’s dire readings are unlikely to provide much fuel for further gains in stocks.”
He added that despite the UK’s figures improving, there is still “very little data to go on”.
He continued: “Some improvement in the UK figures has bolstered the pound as well, as cable looks to continue its recovery from Monday’s lows.
“But with so little data to go on, we are essentially still very much in the dark.
“Until lockdowns are fully ended the data tells us little apart from the fact that economies are operating at a fraction of their overall capacity, something that can be gleaned merely from going for a walk outside.”
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