The Pound is slightly softer versus the Euro at the start o the new week after shedding 0.4% across the previous week. The Pound Euro exchange rate slumped 1% on Friday pulling the pair into negative territory for the week, its second straight week of losses.
At 06:00 GBP/EUR was trading -0.05% at €1.1378 at as investors look ahead to manufacturing PMI for Europe and asses the gradual reopening of the Eurozone economies.
UK-US Trade Talks, BoE & Lockdown Exit Strategy
The Pound dropped sharply lower on Friday after Prime Minister delayed announcing lockdown unwinding measures until next week, despite saying that the UK was past its peak. Whilst the PM has been under pressure to announce an exit strategy, he has resisted amid fears that a second wave of infections could be more devastating than the first
There were 315 coronavirus deaths announced on Sunday. Whilst this is the lowest level since 29th March, it also takes the UK’s total closer to that of Italy’s.
This week there are several events which could direct movement in the pound. Firstly, the UK – US trade talks are due to start tomorrow. Secondly, the Bank of England interest rte decision is due. The central bank is planning the announcement for 7am, rather than 12 noon, which has raised some questions. Is the central bank announcing a big move? Or is the change of timing to prevent leaks? Finally, Boris Johnson is set to lay out of the UK’s lock down exit strategy. This will be very closely watched and will provide clues as to what the economic recovery will look like.
Eurozone Manufacturing PMI
The Euro pushed higher last week after the European Central Bank left interest rates unchanged, as analysts had expected, and tweaked liquidity measures to cushion the economic damage to the Eurozone caused by the coronavirus crisis.
The Euro even advanced after data showed that the GDP contracted by -3.8% and that the second quarter could be significantly worse.
With economies cross the bloc slowly opening and coronavirus numbers falling there is an is a growing sense of optimism. Slowly does it is the key from governments
Today investors will look towards the release of the manufacturing PMI in both the Eurozone and Germany. Analysts are expecting the final reading of April to show activity dived to 33.6 and 34.4 respectively. Weak numbers could drag the Euro lower.
