GBP/EUR Steady, Awaits ECB Rate Decision
The Pound to Euro exchange rate held steady today on forex, with the pairing currently trading around €1.14. European currency investors are awaiting today’s ECB interest rate decision, which should hold at 0%.
If the central bank announces further stimulus measures to strengthen the Eurozone’s economy, the single currency will likely rise.
However, the EUR struggled to gain on the Sterling this morning after France had entered into a recession. The French GDP contracted by a record -5.8% in the first three months of this year.
French statistics body INSEE said the slump in growth was ‘primarily linked to the shutdown of ‘non-essential’ activities. This was in the context of the implementation of the lockdown since mid-March.
Forex news reports that investors will be awaiting today’s publication of the Eurozone’s flash GDP report for the first quarter.
However, this could considerably fall below the consensus and push the bloc deep into recession territory. If that’s the case, markets would see the EUR/GBP exchange rate slump.
Meanwhile, Germany’s Unemployment Change data for April soared to a worse-than-expected 373,000.
Ulrik Harald Bie, an economic editor at Berlingske, said German unemployment increased from 5.0% to 5.8% this month. The labor market is supported by extensive use of kurzarbeit, but unemployment is set to climb further.
However, Germany has the financial means and willpower to support growth substantially later this year.
GBP was steady in the midst of growing concerns over its country’s economy.
The currency struggled following the news that the UK Lloyds Banking Group collapsed in the first quarter.
It lost nearly 95% of its profits. The bank was forced to take out £1.4 billion to cover a surge in bad debts.
COVID-19 Developments Drive the EUR
António Horta-Osório, the Lloyds chief executive, said the coronavirus pandemic presents an unprecedented social and economic challenge. It is having a significant impact on people and businesses in the UK and around the world.
As a result, Sterling traders have become increasingly concerned that the UK could slump more deeply into a recession.
Meanwhile, Prime Minister Boris Johnson will update the nation on the steps to defeat the pandemic.
Any hints at a possible easing of lockdown measures would prove positive for the Pound.
GBP investors will be awaiting tomorrow’s final Markit Manufacturing PMI for April.
Meanwhile, coronavirus developments this week will continue to drive the EUR in the FX market. Additionally, any signs that other nations could ease their lockdown measures would boost hopes for Eurozone’s economy in the near-term.
The UK’s coronavirus response will drive the GBP/EUR exchange rate. However, any signs that the Government could ease its lockdown restrictions will help the Pound rise.
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