Pound Sterling Euro (GBP/EUR) Exchange Rate Edged Higher despite IMF’s Forecast
UPDATE: The Pound Sterling Euro (GBP/EUR) exchange rate edged higher this afternoon, leaving the pairing trading at around €1.1495.
The pairing was able to edge higher this afternoon despite a report from the International Monetary Fund (IMF) showing the global economy is expected to contract by -3%.
The IMF stated this would be largest downturn since the 1930s Great Depression, and in its report stated:
‘It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago.
‘The Great Lockdown, as one might call it, is projected to shrink global growth dramatically.’
Pound Sterling Euro (GBP/EUR) Exchange Rate Flat After Hitting One-Month High
The Pound Sterling Euro (GBP/EUR) exchange rate largely muted this morning. This left the pairing trading at around €1.1465.
The Pound was able to edge higher earlier this morning as risk appetite amongst investors increased, as traders moved away from the safety of the US Dollar (USD).
This saw Sterling rise to a one-month high against both the US Dollar and Euro.
The rise in risk sentiment boosted GBP despite experts warning the UK is likely to be the worst-hit country in Europe during the coronavirus outbreak.
Riskier currencies received a boost after China’s trade data was not as gloomy as anticipated. Exports fell by around -6.6% rather than the forecast -14%.
Added to this, fatalities in the worst-hit country, the United States fell and individual states began plans to re-open their economies.
Commenting on the Chinese data, Chris Weston, head of research at Melbourne brokerage Pepperstone noted the figures were ‘way better’ than forecast. He also added:
‘The market is front-running the idea that we’re going to see the case count dissipate.
‘The baton is now being firmly handed over to the reality of the situation in economic data.’
Euro (EUR) Flat as Macron Extends France’s Lockdown
Meanwhile, leaders in the hardest-hit countries in Europe vowed to keep lockdown in place, but began outlining plans to reopen economies on signs the worst of the outbreak was over.
Yesterday evening French President, Emmanuel Macron said he would extend France’s lockdown until 11 May.
Macron added that he was preparing to gradually lift the isolation orders in place. This came on the same day Spain loosened regulations.
This allowed non-essential workers in Spain in industries such as construction to return to work after a two-week ban.
Last week, the single currency remained under pressure after indecision amongst Eurozone financial ministers.
However, a deal struck on Friday for an emergency economic package worth a trillion Euros provided the single currency with some support.
Pound Euro Outlook: Coronavirus in Focus This Week
Looking ahead to Wednesday, the Euro (EUR) could extend today’s losses against the Pound (GBP) following a slew of weak economic data.
If March’s inflation in Spain, Italy and France disappoint markets, it will send the single currency lower.
Meanwhile, the coronavirus pandemic is likely to remain one of the main catalysts for movement in currency markets.
If risk sentiment continues to improve, and traders continue to move away from safe-haven currencies, the Pound Euro (GBP/EUR) exchange rate will continue to edge higher.