The British pound is flat against the euro on Thursday.
The pound was struggling for direction, with bulls pausing for breath after the UK currency struck one-month highs this week over the euro.
Comments from the President of the European central Bank were brushed off by traders who are watching the progress of the European economies trying to end lockdown restrictions.
Pound versus Euro was higher by 1 pip (+0.01%) to 1.1471 as of 5pm GMT.
GBP/EUR went next-to-nowhere, using 1.148 as a midpoint in a tight trading range. Yesterday the exchange rate fell -0.2%, meaning a week-to-date of +0.73%.
British pound meanders near 1-month highs
Brexit risks were arguably already priced into the price of Sterling before the pandemic so comments from the spokesman for the UK Prime Minister who said on Thursday that “extending the Brexit transition period would prolong uncertainty” had little effect. The UK policy is still not to request any extension and to reject any EU request for one.
Euro brushes off ECB comments
On Thursday, the ECB’s Christine Lagarde said the central bank was “committed to do everything necessary within mandate to fight the crisis.” However consensus opinion is that the ECB is hamstrung by the existence of already ultra-accommodative policy, meaning they have little room to ease policy further. The inability of the ECB to take further action at this stage is an upward pressure on the euro.
Focus has begun to switch away from the macro implications of the coronavirus to the meaning it will have on individual companies. First quarter earnings season is under way and so far the results are pretty dire. Of course, markets discount bad news in advance so disappointing earnings for both the first and second quarter are largely baked into markets. The question is whether the results and the forward guidance from companies are even worse than expected.
On Thursday, German and number one global carmaker Volkswagen withdrew its full year outlook blaming the uncertainty caused by the lockdowns in Europe and elsewhere.
