EUR/GBP Exchange Rate Edges Higher as UK Industry Hit by Closures
The Euro to Pound (EUR/GBP) exchange rate rose by 0.5% today, with the pairing currently trading around £0.874.
The Pound (GBP) struggled today following the release of the final UK Markit Manufacturing PMI. The index fell below forecasts and slipped deeper into contraction territory at 32.6.
Rob Dobson, the Director at IHS Markit, was downbeat in his analysis, saying:
‘UK manufacturing suffered its worst month in recent history in April, as output, orders books and employment all fell at rates far surpassing anything seen in the PMI survey’s 28-year history. Huge swathes of industry were hit hard by company closures, weak global demand, lockdowns and social distancing measures in response to COVID-19. The only pockets of growth were seen at firms making medical and food products.’
Meanwhile, Sterling has struggled to gain against the single currency despite Prime Minister Boris Johnson announced that the UK is now ‘past the peak’ of the coronavirus.
GBP investors are looking ahead to next week when Downing Street will announce its lockdown easing plans.
Euro (EUR) Rises as Eurozone Continues to Open Up Economy
The Euro (EUR) continued to edge higher as the Eurozone continues to open up its economy following the bloc’s coronavirus crisis.
Thursday saw the French Health Authorities release a map showing where the country will ease its lockdowns after May 11th. As a result, certain ‘green zones’ will be able to lift restrictions earlier than others.
Consequently, the Euro (EUR) rose now that a number of Euro-area countries are making cautious steps toward re-opening their economies.
Meanwhile, yesterday saw the Eurozone’s quarterly GDP figure fall below consensus by -3.8%.
Andrew Kenningham of Capital Economics said the recent blizzard of negative data had confirmed the Eurozone’s economy was now in ‘free-fall’.
However, Euro (EUR) investors are remaining cautious as the European Central Bank (ECB) has to play a waiting game. Instead, Europe’s central bank is monitoring the economic impact on the virus and is holding steady on fears of a ‘second wave’ of the virus.
EUR/GBP Outlook: Could the Euro Fall on a Weak German Manufacturing PMI?
Euro (EUR) investors will be looking ahead to Monday’s release of Germany’s Markit Manufacturing PMI for April. However, if this falls below consensus and deeper into contraction territory, we could see the single currency fall.
The EUR/GBP will remain sensitive to the UK’s coronavirus developments next week. We could see Sterling rise, however, if Downing Street announces radical measures to reboot its economy.