Pound (GBP) Weaker than Any Point During Brexit Process
UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate slumped this afternoon, leaving the pairing trading at around €1.0853.
Sterling slumped this afternoon, giving up this morning’s gains against both the Euro and US Dollar.
Commenting on this, chief executive and founder of deVere Group, Nigel Green said:
‘These are unprecedented times. The Pound is weaker now than at any point during the Brexit process, the 2008 financial crash, or 1992’s Black Wednesday when speculators forced the government’s hand in pulling the Pound from the European Exchange Rate Mechanism.’
Pound Sterling Euro (GBP/EUR) Exchange Rate Rallies as Germany’s Economy in ‘Shock’
The Pound Sterling Euro (GBP/EUR) exchange rate edged 0.8% higher this morning, leaving the pairing trading at around €1.1008.
The single currency slumped this morning, after data revealed that German business morale plummeted in March.
Ifo showed morale fell to its lowest level since 2009, a further indication that the bloc’s largest economy was headed for a recession due to the coronavirus pandemic.
Business climate fell from February’s 96 to 86.1 this month, dampening EUR sentiment.
In a statement following the data release, Ifo President Clemens Fuest said:
‘This is the steepest fall ever recorded since German reunification and the lowest value since July 2009.
‘The German economy is in shock.’
Sterling (GBP) Rises on Fed’s ‘Fiscal Bazooka’
Data released this morning revealed that British inflation fell back from an earlier six-month high reached in January.
February’s inflation slipped, reflecting a drop in the cost of fuel and video games which predated the impact of the coronavirus pandemic on the country’s economy.
Inflation continues to remain below the Bank of England’s (BoE) target of 2%, currently sitting at 1.7%.
However, Sterling was able to make gains as the US Dollar slumped for the third consecutive day, boosting risk appetite.
Investors began to move away from the safety of the Dollar after a deal to backstop the world’s largest economy with a huge fiscal stimulus package was promised.
Commenting on this, Moh Siong Sim, currency analyst at the Bank of Singapore said:
‘Now we are seeing the fiscal bazooka in action, and that should help further ease the Dollar funding stress.
‘There has been a need for cash to ride through this period where there is a revenue shortfall.’
The deal followed announcements of huge moves from the US Federal Reserve which attempted to restore market confidence.
Pound Euro Outlook: German Confidence and BoE in Focus
Looking ahead, the Euro (EUR) could suffer further losses against the Pound (GBP) following the release of German consumer confidence data.
If GfK reveals confidence plummeted in April due to the coronavirus pandemic, the single currency will slide.
Meanwhile, British retail sales data could cause Sterling sentiment to remain under pressure on Thursday morning.
If February’s fall further than expected, it could leave the Pound trading lower.
However, the Bank of England (BoE) are expected to give an interest rate decision and release monetary policy meeting minutes.
If the BoE announce any further stimulus it could provide Sterling with a boost and cause the Pound Euro (GBP/EUR) exchange rate to edge higher.