EUR/GBP Exchange Rate as the Eurozone’s Economic Outlook Remains Subdued
The Euro to Pound (EUR/GBP) exchange rate dipped by -0.1% today, with the pairing currently trading around £0.89.
The single currency edged higher today after Germany’s ZEW survey of economic sentiment for May beat expectations and rose from 28.2 to 51.
ZEW President Achim Wambach commented on the survey:
‘Optimism is growing that there will be an economic turnround from summer onwards.’
‘According to the financial market experts surveyed, economic growth is expected to pick up pace again in the fourth quarter of 2020.’
However, today saw the German ZEW survey of May’s current situation gauge plummet to a worse-than-expected -93.5.
Nevertheless, the Euro (EUR) has benefited from growing hopes that the Eurozone could begin to recover its economy. More nations within the Eurozone are reopening their economy following the peak of Europe’s coronavirus crisis.
Pound (GBP) Sinks on Dire UK Unemployment Data for April
The Pound (GBP) struggled today on dire UK employment data. Today saw the release of the ILO unemployment rate report for March, which climbed by 3.9%, falling slightly below the 4.4% forecast.
Today also saw the release of April’s claimant count change figure, which soared above forecasts from 12.1 thousand to 856.5 thousand.
The British minister for employment, Mims Davies, argued that the UK could bounce back from the unemployment struggle, however.
UK Chancellor Rishi Sunak, however, warned that the UK is facing a recession the ‘likes of which we haven’t seen’.
Mr. Sunak added:
‘It is not obvious that there will be an immediate bounce back. It takes time to get back to the habits that they had. There are still restrictions in place. Even if we can re-open retail, which I would very much like to be able to do on 1 June, there will still be restrictions on how people can shop, which will have an impact likely on how much they spend.’
As a result, Pound (GBP) investors have become increasingly concerned for the health of British economy going forward.
EUR/GBP Outlook: Could the Euro Rise as European Economies Reopen?
Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK Consumer Price index for April. If this confirms consensus and falls from 1.5% to 0.9%, then we could see Sterling suffer.
Tomorrow will also see the release of the UK’s retail sales figures for April. However, with the British retail set to be heavily hit by the Covid-19 crisis, this is likely to drag on the Pound.
Meanwhile, Euro (EUR) investors will be awaiting tomorrow’s release of the Eurozone’s inflation data for April. Nevertheless, with the Eurozone also struggling from the coronavirus pandemic this is unlikely to brighten the bloc’s economic outlook.
The EUR/GBP exchange rate could edge higher this week, however, if Europe’s key economies continue to reopen and ease their lockdown restrictions. As a result, the single currency could rise on hopes that the Eurozone could recover its economy faster-than-expected.