EUR/GBP Exchange Rate Falls as Eurozone Economy Struggles
The Euro to Pound (EUR/GBP) exchange rate held steady today, with the pairing currently trading around £0.878.
The Euro (EUR) suffered today following the publication of the Eurozone’s Markit Manufacturing PMI for April, which fell below forecasts from 33.6 to 33.4. As a result, single currency investors have become increasingly concerned for the bloc’s economic health.
Chris Williamson, the chief business economist at IHS Markit, struck a note of cautious optimism, however, saying:
‘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.’
‘Barring any second wave of infections, which would throw any recovery off course, the news should start to improve as we see more people and businesses get back to work.’
Today also saw the release of the Eurozone’s Sentix Investor Confidence figure for May. This fell to a worse-than-expected -41.8.
Many Euro (EUR) investors have become increasingly cautious, however, after France extended its coronavirus emergency into June.
Pound (GBP) Steady as NHS Nightingale ‘On Standby’
The Pound (GBP) failed to gain on the single currency today due to rising uncertainty over Downing Street’s next move. As a result, speculation has risen over what form the lockdown easing measures will take in the coming days.
Today saw the emergency hospital, NHS Nightingale, put ‘on standby’. Some investors saw this as a positive signal that Covid-19 cases are less-than-expected.
Chief Executive of Nightingale, Charles Knight, commented:
‘As the prime minister has said, we are now past the first peak in coronavirus cases and the NHS is therefore moving into the second phase of its response to this global pandemic. It is likely that in the coming days we will not need to be admitting patients to the London Nightingale, while coronavirus in the capital remains under control.’
Meanwhile, today saw speculations over whether UK businesses will be set to return in the coming weeks. There was also talk of the 2-metre distance rule being eased.
Nevertheless, Sterling performed badly against many of its peers today due to UK market uncertainties.
EUR/GBP Forecast: Could a Dovish German Buba Speech Weaken the Single Currency?
Euro (EUR) traders will be awaiting tomorrow’s speech by the German Bub President, Weidmann, tomorrow. If he is notably downbeat about the Eurozone’s economy going forward, then we could see the single currency suffer.
Pound (GBP) investors will be paying close attention to the UK Markit Services PMI for April. However, if the UK’s largest sector suffers a worse-than-expected blow last month, then this would prove Pound-negative.
The EUR/GBP exchange rate will remain sensitive to Downing Street’s announcements this week. Easing UK lockdown down measures could be would raise Sterling.