Johnson’s Call for Lockdown Patience Fails to Dent Pound Sterling Euro (GBP/EUR) Exchange Rate
While Boris Johnson urged greater patience over the ongoing Covid-19 lockdown the Pound Sterling to Euro (GBP/EUR) exchange rate found renewed traction.
Although the UK continues to lack any clear exit strategy from the lockdown the mood towards Pound Sterling (GBP) still improved at the start of the week.
With other economies around the world starting to ease some of their own lockdown restrictions an uptick in market risk appetite helped to boost GBP exchange rates.
Support for the Euro (EUR), meanwhile, weakened in response to news that the number of French jobless claims had jumped by more than 7% in the last month.
As the Eurozone economy still looks set to slow sharply in the face of the pandemic the mood towards the single currency naturally soured.
CBI Reported Retail Sales Slump Forecast to Drag Pound Lower
However, demand for the Pound looks set to falter on Tuesday if the latest CBI reported retail sales index weakens as forecast.
Investors expect to see the headline index slump from -3 to -40 in April, reflecting the damage caused by the country’s economic shutdown.
With consumer spending appearing on course to remain muted in the second quarter the chances of any imminent recovery of economic momentum appear limited.
Unless the survey demonstrates greater signs of resilience within the economy the GBP/EUR exchange rate could struggle to hold onto its positive footing.
Euro Vulnerable to Further Losses on Underwhelming Eurozone Confidence Indexes
On the other hand, the Euro could come under further pressure in the days ahead as markets brace for April’s Eurozone business confidence survey.
Forecasts point towards an easing of sentiment across the board, with both consumer and business confidence looking set to slip deeper into negative territory at the start of the second quarter.
Without reassurance that a potential easing of lockdown conditions could encourage a greater sense of optimism, restoring some of the economy’s lost activity, the mood towards the Euro could sour further.
Now that a number of Eurozone countries have started to lift some of their restrictions on economic activity, though, EUR exchange rates could suffer selling pressure if the Covid-19 infection rate shows any signs of picking up again.
Lack of Clarity over UK Covid-19 Lockdown Set to Limit Pound Appeal
Even so, until UK businesses receive greater insight into the government’s plans to return the economy to normal the GBP/EUR exchange rate may lack any particular sense of bullishness.
As long as a sense of uncertainty over the UK’s path out of the lockdown remains this could limit the Pound’s ability to push higher against its rivals.
If the government proves reluctant to ease any of its current measures, for fear of triggering a second wave of infections, the appeal of the Pound may diminish.
With the UK economy already appearing on course to face a major gross domestic product contraction the prospect of an extended delay could see the GBP/EUR exchange rate slump.