EUR/GBP Down as COVID-19 1st Phase Ends
The Euro to Pound exchange rate fell by -0.4% on Monday. The pairing is currently trading on the forex exchange market around £0.872.
The Pound continued to gain today following Prime Minister Boris Johnson’s return to Downing Street on Sunday evening.
This sparked hopes that the UK government could begin to take steps towards easing nationwide lockdown measures. Consequently the Sterling edged higher against the Euro.
However, British Foreign Secretary Dominic Raab, was critical of prematurely lifting lockdown measures. He said we’ve got to make sure of two things.
Firstly, we don’t risk a second spike, for all the reasons we’ve discussed. Secondly, that overall, this package doesn’t allow the pandemic to get back hold, to spread more widely. And to undo all the progress we’ve made, or the sacrifices from so many people.
Today’s lack of UK data will leave Sterling investors awaiting the publication of the UK Government’s coronavirus timetable.
If PM Johnson hints at easing lockdown measures, then we could see the GBP/EUR rise on forex.
EUR Down as German Business Morale Collapses
The EUR struggled against the GBP following last week’s slew of dire Eurozone economic data. This saw German business moral collapse in the wake of the COVID-19 pandemic.
IFO President Clemens Fuest said sentiment at German companies is catastrophic. The coronavirus crisis is striking the German economy with full fury and demand for industrial products has collapsed.
Meanwhile in forex news, some Euro investors are becoming more optimistic about the Eurozone’s economy. This was after Italy, one of the most heavily hit by the coronavirus, has begun to outline lockdown easing measures.
Eurozone’s economy has teetered on the brink of a recession and French President Emmanuel Macron warned of an unprecedented collapse. With that, the EUR/GBP exchange rate has remained subdued today.
IHS Markit assessment stated the eurozone economy suffered the steepest falls in business and employment ever recorded in April. This was a result of measures taken to contain the coronavirus outbreak.
EUR investors will be looking forward to Wednesday’s release of April’s flash German harmonized inflation report. If this significantly falls below consensus, then we could see the Euro fall deeper against the Pound.
The EUR/GBP exchange rate will remain sensitive to announcements from No.10. This is due to a lack of UK economic data. However, any signs that the UK could begin to ease lockdown measures would prove positive to the pound.