GBP/EUR Exchange Rate Rangebound as Monthly GDP Shows Some Improvement Following Covid-19 Lockdown
The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.111.
Sterling is rangebound against the Euro (EUR) following this morning’s release of the flash UK GDP figure for the second quarter, which fell from -2.2% to -20.4%.
Consequently, GBP investors are becoming increasingly concerned as the UK has plunged into its deepest recession since records began.
British Chancellor Rishi Sunak commented on today’s data, saying:
‘I’ve said before that hard times were ahead and today’s figures confirm that hard times are here. Hundreds of thousands of people have already lost their jobs and, sadly, in the coming months many more will.’
Nevertheless, UK monthly GDP figures were relatively positive, showing a rebound after Covid-19 lockdown measures were relaxed in June. The month-on-month figure beat forecasts and rose from 1.8% to 8.7%.
Jonathan Athow, the deputy statistician for economic statistics at the ONS, commented:
‘The economy began to bounce back in June, with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.’
Euro (EUR) Steady as Eurozone Markets Await Latest Industrial Production Data
The Euro (EUR) failed to gain on the Pound (GBP) following yesterday’s worse-than-expected German ZEW Survey of the current situation or August. The figure fell from -80.9 to 81.3.
ZEW President Professor Achim Wambach commented on yesterday’s mixed data regarding the German economy’s outlook:
‘Hopes for a speedy economic recovery have continued to grow, but the assessment of the situation is improving only slowly. According to the assessments of the individual sectors, experts expect to see a general recovery, especially in the domestic sectors. However, the still very poor earnings expectations for the banking sector and insurers regarding the coming six months give cause for concern.’
In other Eurozone economic news, today will see the release of the latest industrial production data for June. Any improvement in the bloc’s industrial sector could buoy the EUR/GBP exchange rate.
GBP/EUR Forecast: Could Growing French Unemployment and Weak German Inflation Drag Down the Single Currency?
Euro (EUR) investors will be looking ahead to tomorrow’s release of Germany’s harmonised index of consumer prices for July. Any improvement in the Eurozone’s largest economy’s inflation data could buoy the single currency.
Tomorrow will also see the release of the French ILO unemployment figure for the second quarter. However, if this confirms forecasts and rises to 8.3%, we could see the Euro compromised by concerns for the French economy’s recovery.
Meanwhile, the GBP/EUR exchange rate will remain dictated by the UK’s Covid-19 situation. Any further pessimism about the British economy’s ability to recover from the coronavirus crisis would prove GBP-negative.