Pound to Euro Dips over UK Goods Export Data

March 9, 2021 - Written by John Cameron

STORY LINK Pound to Euro Dips over UK Goods Export Data

The Pound to Euro exchange rate dipped this morning as fresh concerns over the state of the UK’s economy pushes Sterling down.

At the time of writing the GBP/EUR exchange rate is currently trading at around 1.1650, as a report published from Aston University showed the showed the extent of the decrease in the UK’s goods exports in 2020.

Pound Sterling (GBP) Exchange Rates Stumble over Trade Concerns

The Pound stumbled this morning after a report published yesterday revealed that UK goods exports plummeted by £54bn in 2020, causing concern over the large scale of damage inflicted on the UK economy during the coronavirus pandemic, and the end of the Brexit transition period.

City AM wrote on the data that:

‘The findings, from Aston University’s Lloyd’s Banking Group Centre for Business Prosperity, showed that Britain suffered a 14.7 per cent drop in goods exports, one of the largest of any major country in 2020, and also saw a slower recovery as other nations gobbled up market share in key export destinations.’

‘Goods exports including cars, oil and gas, machinery and pharmaceuticals all tumbled as the pandemic battered economies worldwide and supply chains broke down.’

Furthermore, UK-German trade also slumped at the start of 2021, as German imports from the UK tumbled down 56.2% to €1.6bn compared with the previous year.

Even more so, Professor in Chris Whitty’s warning to MPs that things could turn bad very fast if lockdown easing is rushed could weigh on GBP.

Euro (EUR) Exchange Rate Heads Higher Despite Eurozone GDP Missing Forecasts

The Euro headed higher this morning despite Eurozone GDP data estimates for Q4 narrowly missing forecasts, a confirmed contraction in growth.

The European Union’s statistics office stated that GDP in the Eurozone area fell by 0.7% quarter-on-quarter, more than the initial 0.6% estimate, for a 4.9% year-on-year drop, less than the previous estimate of 5%.

This will likely set the Eurozone up for a double-dip recession as contraction is likely at the start of this year while EU countries are under lockdown.

The Euro has capitalised however, on its negative correlation with the US Dollar (USD). As the US Dollar weakens, the Euro has gained and seen itself further supported.

GBP/EUR Exchange Rate Forecast: Coronavirus Developments in Focus

In absence on any notable data from the UK until the second half of the week, Pound investors will be keeping an eye on any further coronavirus developments from the country.

As care home deaths are down by a third compared to last week (according to the Office of National Statistics), traders will be focused on whether these figures continue to decline.

For Euro investors, the European Central Bank’s (ECB) interest rate decision will be in focus, which is expected to remain at 0% to help combat the effects of the coronavirus pandemic.\

EUR investors will be looking for insight into the ECB’s forward guidance on how the bank could shape future monetary policy.

Though any cautious commentary from members of the ECB regarding the recovery of the Eurozone’s economy will add pressure to the single currency.

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TAGS: Pound Euro Forecasts