May 14, 2020 - Written by John Cameron
STORY LINK Pound Euro (GBP/EUR) Exchange Rate Stuck Near Yesterday’s Six-Week Low
Pound Sterling Euro (GBP/EUR) Exchange Rate Remains Near Six-Week Low
The Pound Sterling Euro (GBP/EUR) exchange rate remained flat, leaving the pairing trading at around €1.1305.
The Pound hit a six-week low against the Euro on Wednesday and remained near those levels on Thursday.
Meanwhile, the single currency remained flat after data revealed Germany recorded its highest number of new coronavirus cases in five days as the country continued to ease lockdown restrictions.
The number of reported coronavirus cases increased by 927 in 24 hours while the death toll rose by 123. This was the highest daily death toll since 7 May.
However, the infection rate fell further below a key threshold which likely offered some support.
Germany also announced it would be opening its borders with it European neighbours by 15 June as long as the spread of coronavirus remains under control.
Sterling (GBP) Flat on ‘Severe’ Economic Disruption
The Pound remained under pressure today as traders continued to worry about yesterday’s UK growth data which showed the economy shrank by a record -5.8% in March.
Growth suffered in the first quarter as the UK was forced into lockdown in March, causing GDP to shrink by -2% in Q1. This was the largest contraction since the depths of the financial crisis at the end of 2008.
Sterling also remained under pressure after British Chancellor Rishi Sunak said it was ‘very likely’ the country was in the midst of a recession.
Speaking after the publication of UK growth statistics, the Finance Minister stated:
‘We have to support people’s jobs, their incomes, livelihoods at this time, and support businesses so we can get through this period of severe disruption and emerge stronger on the other side.’
Added to this, traders were concerned as April’s growth data is likely to post even lower as the country spent the entire month in lockdown.
Capital Economics’ senior UK economist, Ruth Gregory said the figures showed the UK’s economy was ‘already in freefall within two weeks of the lockdown going into effect’.
‘With the restrictions in place until mid-May and then only lifted very slightly, April will be far worse.’
Pound Euro Outlook: Eurozone GDP Data in Focus This Week
Looking ahead to Friday, the Euro (EUR) could suffer significant losses against the Pound (GBP) following the release of German growth data.
The single currency will remain under pressure if flash German GDP data reveals the economy has contracted significantly in the first three months of 2020.
Added to this, EUR could suffer further losses on Friday morning after the release of preliminary GDP data for the Eurozone as a whole.
If growth in the bloc contracts more than forecast in the first quarter, the Pound Euro (GBP/EUR) exchange rate will edge higher.
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TAGS: Pound Euro Forecasts