Extended French and German Lockdowns Fail to Boost Pound Euro (GBP/EUR) Exchange Rate
While Eurozone nations moved towards an extension of their current Covid-19 lockdown measures this failed to offer the Pound Sterling to Euro (GBP/EUR) exchange rate any degree of support.
With both France and Germany looking set to remain in lockdown until at least early May the chances of any imminent economic recovery weakened further.
All in all, the Eurozone appears on course to experience an even greater loss of momentum in the second quarter as the economy remains in a state of standstill.
Even so, the Euro (EUR) was able to find some traction against its rivals this morning after an upward revision of France’s finalised consumer price index data for March.
Worries over UK Business Outlook Weigh on Pound Sterling Demand
Pound Sterling (GBP) largely fell out of favour, meanwhile, as confidence in the outlook of the UK economy remained muted.
Although the government gave the green light for construction on the HS2 rail line to commence this was not enough to encourage any optimism among investors.
While the number of UK businesses seeking support from the government’s Coronavirus Business Interruption Loan Scheme (CBILS) increased in the last week concerns over the impact of the scheme lingered.
As small and medium businesses remain at significant risk in the face of the ongoing Covid-19-based disruption markets remain wary of the potential for further collapses in the coming weeks.
With the economy looking set for another rough quarter, especially in the wake of the Office for Budget Responsibility’s (OBR) gloomy projections, there was little room for Pound support.
Euro Vulnerable to Underwhelming Eurozone Industrial Production
Worries over the health of the Eurozone economy could pick up further on Thursday, however, with the release of February’s industrial production figures.
Forecasts point towards production falling on both the month and the year, even before the major impact of the Covid-19 crisis hit.
As long as the Eurozone manufacturing sector shows further signs of weakness the potential for Euro gains could diminish.
Even though the currency union already appears on course for a sharp first quarter slowdown another set of disappointing data could still weigh heavily on EUR exchange rates in the short term.
Plunge in UK Retail Sales to Push GBP/EUR Exchange Rate Further from Highs
March’s British Retail Consortium (BRC) like-for-like retail sales index may prompt the GBP/EUR exchange rate to shed further ground.
If sales plunge -5.5% on the year as anticipated this would offer investors fresh incentive to sell out of the Pound tomorrow.
As strong levels of consumer spending have previously helped to shore up economic activity confirmation that sales dropped sharply last month would add to the odds of a weak quarterly growth rate.
With the Covid-19 lockdown likely to keep consumer spending muted for some time to come a weak showing here could see the GBP/EUR exchange rate falling further from its recent monthly high.