Pound Sterling Euro Increase by 0.4%
The Pound Sterling Euro exchange rate is up by around 0.4% leaving the pair trading in forex at around €1.1447.
The single currency held steady against the sterling earlier today. Then it went slumping ahead of the meeting between European Union officials on the bloc’s response to the economic chaos.
However, it may take until summer, or longer for officials to agree on how exactly to finance aid. That is, in order to help economies to recover. This is due to the major disagreements between countries persisting which weighed on EUR currency.
FX markets continue to be cautious as it is uncertain how far the bloc’s governments will co-operate. That is in financing a recovery from what will likely be a deep recession.
Flash PMI data revealed manufacturing and service sector activity in the bloc’s largest economy suffered from record contraction in April.
The headline flash German composite PMI plummeted from 35 to 17.1 this month. This was the lowest reading since comparable data was first collected 22 years ago.
Phil Smith, Principal Economist at IHS Markit said April’s PMI surveys reveal the full effects of the COVID-19 pandemic. This includes effects of the subsequent lockdown on Germany’s economy, showing business activity across manufacturing and services falling.
It is falling at a rate unlike anything that has come before. Compared to 36.3 during the financial crisis, the headline PMI’s reading of 17.1 shows the pandemic’s impact on businesses.
The short-term work scheme is having the desired effect of curbing job losses. That is, with employment falling much less than output during April.
Still employment redundancies and contract cancellations have led to a record drop in workforce numbers. That is, as firms look to cut costs and position themselves for a hard slog in the months ahead.
Sterling Gains Despite Grim Flash PMI Readings
Data showed that the UK suffered its fastest decline in business activity on record.
Britain’s flash PMI composite fell from March’s 36 to a survey record-low 12.9. But, this did little to stop GBP making slight gains against the Euro.
Surveys revealed that around 81% of service providers and 75% of manufacturing companies reported a decline in business in April. This was overwhelmingly attributed to the COVID-19 pandemic which is also impacting the pound, sterling and euro.
The euro could edge lower against the pound in forex trading as traders focus on today’s European Union meeting.
If divisions between officials continue to dominate the meeting, it will leave the single currency under pressure.
Meanwhile, the sterling remains at the front foot despite weak UK data and looks for recovery extension.
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