The British pound is higher against the euro on Tuesday.
A more stable outlook for oil markets and the clarity offered by the release of first quarter earnings results, albeit poor results, has helped lift the British pound.
Several European countries easing lockdown restrictions is a source of added optimism for broader markets that has so far benefited Sterling more than it has the euro.
Pound versus Euro was higher by 53 pips (+0.45%) to 1.1511 as of 3pm GMT.
GBP/EUR rallied up to 1.15, pulled back to 1.145 and made another move up and beyond 1.15 to new one-month highs. Yesterday the exchange rate rose +0.66%, giving it a week-to-date return of +0.99%.
British pound gains as European economies reopen
That some European countries have cut back on lockdown measures is helping lift sentiment and in turn the pound. While France extended its lockdown, Spain and Italy have opened up sections of the economy to reduce the economic impact on some areas of the workforce. Spain and Italy were some of the worst hit from the pandemic so it is encouraging that they are able to lift some restrictions.
The UK has not set a deadline for ending restrictions. This lack of an ‘exit plan’ in the UK could be a future source of uncertainty the longer it persists.
Euro makes new one-month lows against the pound
There is approaching two million coronavirus cases globally, nearly double the number just two weeks ago – but the speed of increase is seemingly slowing. Now the countries that have a slower rate of growth are trying to reopen economies.
Around 300,000 ‘nonessential’ Spanish workers returned to work in the Madrid region on Monday, mostly from the construction and manufacturing sectors. The logic being that they are least exposed to the general public and so least likely to cause a wider spread. The service sector, which includes tourism will remain closed, which for countries like Spain and Italy contribute significant amounts to GDP.
The more the ‘stay home’ orders are eased off, and in more countries, the easier economists will be able to judge the economic toll from the pandemic.
