GBP/EUR Exchange Rate Steady as Eurozone’s Factory Orders Suffer
The Pound to Euro (GBP/EUR) exchange rate held steady this morning after the final Eurozone’s Markit Manufacturing PMI for April fell below forecasts to 33.4. The pairing is currently trading around €1.137.
Chris Williamson, the Chief Business Economist at IHS, was however optimistic that last month may have been the ‘eye of the storm’, commenting:
‘Euro area manufacturing output plunged to an extent greatly exceeding any decline previously seen in the near 23-year history of the PMI survey in April, reflecting a combination of factors including widespread factory closures, slumping demand and supply shortages, all linked to the COVID-19 outbreak.’
‘With virus curves flattening and talk now moving to lifting some of the pandemic restrictions, April will have hopefully represented the eye of the storm in terms of the virus impact on the economy, meaning the rate of decline will now likely start to moderate.’
However, the Euro (EUR) has been helped by news of new lows for Covid-19 deaths in France, Spain, and Italy. As a result, this has left many single currency investors optimistic that the Eurozone’s economy could begin to make a recovery this month.
Nevertheless, France extended its coronavirus emergency for two months. French Minister of Health, Oliver Veran, said that the nation’s health emergency would now extend to July 24th.
Pound (GBP) Steady as Speculation Grows Over UK Lockdown Easing Plans
The Pound (GBP) struggled to gain against the Euro (EUR) today due to growing speculation over Downing Street’s next moves to ease the UK’s lockdown measures.
Today saw the circulation of a rumour that the two-metre rule could be relaxed. As a result, some Sterling traders are hoping that the British economy could make steps towards recovery in the near-term.
However, concerns from the Trades Union Congress (TUC) have sparked doubts over some businesses being able to return to work any time soon.
The TUC highlighted risks to employees:
‘Working people need to see that the government is genuinely committed to protecting their health and safety. At present, this guidance fails to provide clear direction to those employers who want to act responsibly and is an open goal to the worst of employers who want to return to business at usual – which will put their workforce at risk.’
Consequently, the Pound (GBP) has been held back today by growing uncertainty over how Britain will reengage its economy going forward.
Could Sterling Rise This Week as No 10 Announces Lockdown Easing Measures?
Euro (EUR) investors will be looking ahead to tomorrow’s speech by Dr Jens Weidmann, the President of the Deutsche Bundesbank. If he is notably dovish about the Eurozone’s largest economy, then we could see the single currency suffer.
Tomorrow will also see the publication of the final Markit Services PMI for April. However, as the UK’s biggest sector struggles amid the coronavirus pandemic the figure is likely to plunge deeper into contraction territory.
The GBP/EUR exchange rate could rise this week, however, if Downing Street further outlines its lockdown easing plans. As a result, Sterling could edge higher on hopes that Britain could take cautious steps towards opening its economy.