The Pound rallied hard versus the Euro across the final two days of last week. However, this was a case of too little too late. The Pound lost 1.5% versus the common currency throughout the entire previous week, in its fifth straight week of losses.
The Pound versus Euro exchange rate closed Friday at €1.0886, after picking up from Wednesday’s 11 year low of €1.0523, in a week where central banks across the globe took action to prop up their economies amid the growing economic strain of coronavirus.
Today at 06:30 UTC, GBP/EUR is trading at €1.0886 as investors digest the latest coronavirus headlines from the weekend.
Pound Investors Consider Full A Scale Lock Down
Last week, there was a lot of action from both the Bank of England and the UK Government to help shield the UK economy from the impact of coronavirus. Early last week Chancellor Rishi Sunak announced at £330 billion bailout package for business. However, this failed to lift the Pound, as investors did not consider it to be sufficient to prevent the UK from slipping into recession. Particularly given the increasingly stricter measures being advised by the government.
The Pound then recovered after the BoE slashed interest rates to an all time low of 0.1% and announced £200 billion stimulus package.
Since then, Boris Johnson has stepped up the response closing gyms, pubs and restaurants. The stricter measures will mean a bigger hit to the UK economy. However, the Chancellor has also taken unprecedented measures to prevent workers from being laid off.
The Pound is holding steady as investors digest the possibility of a full-scale lock down.
Eurozone Consumer Confidence Up Next
The Euro struggled last week following the release of the March’s German ZEW economic sentiment survey which plummeted to a significantly worse than expected 49.5. The figures revealed that the mood among German investors was down at levels last seen in the financial crisis.
With more countries within the eurozone going into lock down and implementing increasingly strict measures to tackle coronavirus, the fragile eurozone economy will be deeply affected. The ECB pledged a $750 billion rescue package.
Today investors will look ahead to Eurozone consumer confidence data for March. Analysts are expecting consumer confidence to plunge to -13.3 from -6. Lower consumer confidence equates to lower consumption which is bad news for the economy. A weak reading could drag on the Euro.
