Pound Sterling Euro (GBP/EUR) Exchange Rate Muted as Boris Johnson Moves to Intensive Care
UPDATE 7/4/20: The Pound Sterling Euro (GBP/EUR) exchange rate remained flat this morning, leaving the pairing trading at around €1.1337.
Sterling sentiment remained fragile this morning after British Prime Minister was moved to intensive care due to his coronavirus symptoms worsening.
According to Downing Street, the Prime Minister was moved on the advice of his medical team and was receiving ‘excellent care’. They also added that Johnson was still conscious.
Commenting on this, Ilan Solot, an FX strategist at Brown Brothers Harriman said:
‘If he is impaired from resuming his official duties, then it creates some complications but we have to wait and watch.’
Pound Sterling Euro (GBP/EUR) Exchange Rate Edges Higher despite ‘No Upturn in Sight’ for UK Construction
UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate edged 0.6% higher, leaving the pairing trading at around €1.1403.
Sterling made further gains against the Euro despite data revealing that construction work in the UK fell at the fastest pace since April 2009.
Rapid declines in construction output and new work left the construction PMI firmly in contraction territory.
The UK construction PMI plummeted from 52.6 in February to 39.3 in March. Although, GBP continued to rise against the single currency.
The rate of employment also slumped at the fastest pace since September 2010 and business expectations fell to the lowest since October 2008.
Commenting on the data, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply said:
‘With no upturn in sight, and with the fastest level of layoffs since September 2010, the sector is stuck in quicksand and sinking further. Though lower commodity prices will bring some relief for those that can source a limited number of materials amidst disrupted supply chains, this will be cold comfort without sites to work in and staff available as health concerns remain. The brutality of this impact cannot be underestimated, and the sector has not hit rock bottom yet.’
Pound Sterling Euro (GBP/EUR) Exchange Rate Rises on Eurozone’s ‘Severe’ Construction Downturn
The Pound Sterling Euro (GBP/EUR) exchange rate edged 0.3% higher this morning. This left the pairing trading at around €1.1372.
On Monday, data revealed that construction activity fell at the fastest rate in over 11 years in the Eurozone. The bloc’s construction PMI plummeted from 52.5 in February to 33.5 in March.
The single currency remained under pressure as both employment and purchasing activity fell sharply, while new orders plummeted in March.
Commenting on this morning’s data release, Markit’s Principal Economist, Bernard Aw noted:
‘The Eurozone construction sector fell into a severe downturn in March as measures to contain the COVID-19 outbreak hit activity and demand.
‘Construction activity fell sharply as firms reported slumping demand. This in turn adversely impacted hiring and purchasing activity. Construction employment shrank at a rate not seen for a decade while firms cut back on input purchases at the fastest rate recorded since the survey started just over 20 years ago.
‘Unsurprisingly, business sentiment was seriously dented, with Eurozone construction firms expressing pessimism for the first time in nearly four-and-a-half years, hinting at challenging times in the months ahead, especially if the anti-virus measures continue for a prolonged period.’
British Consumer Confidence Falls ‘Off the Cliff’
Data from GfK showed that British consumer confidence fell, recording the largest fall in over 45 years.
GfK ran an extra poll at the end of last month which showed that consumer sentiment was at its lowest since February 2009.
The sentiment index plummeted from -9 in its regular survey for March to -34, the largest fall on record.
Commenting on this, client strategy director at GfK, Joe Staton said:
‘Our COVID-19 ‘flash report’ shows a dramatic result with consumer confidence falling off the cliff in the last two weeks of March.’
Survey data from last week was similarly gloomy, as Markit showed monthly UK PMIs had plummeted in March.
However, weak data from the Eurozone left the Euro under pressure and allowed GBP to make gains.
Pound Euro Outlook: German Industrial Production in Focus
Looking ahead, the Euro (EUR) could continue to suffer losses against the Pound (GBP) following the release of German economic data.
If German industrial production plummets further than expected in February, the single currency will slide.
Meanwhile, EUR could suffer further losses following the release of France’s trade balance.
If France’s trade balance disappoints on Tuesday, the Pound Euro (GBP/EUR) exchange rate will edge higher.