The British pound is flat against the euro on Tuesday.
The delay to the easing of social distancing measures in the United Kingdom until May 7 has caused the week-long rally in the exchange rate to peter out.
There is broad-based optimism about the falling number of coronavirus infections across Europe but traders are sitting on their hands before Thursday’s big ECB rate decision.
Pound versus Euro was higher by 4 pips (+0.04) to 1.1478 as of 4pm GMT.
GBP/EUR briefly topped 1.15 for the first time in over a week but gains slipped back to breakeven.
British pound gains stall at 1-week high
There was some added clarity on the UK plan to ease lockdown restrictions over the next few weeks but there were no clear dates beyond May 7, which had already been set out as the three-week deadline since the last decision on the state of the lockdown. The more cautious approach from in the UK is in the light of a death toll approaching one of the worst in Europe.
The government has outlined five tests it wants to see before reopening the economy. 1: Making sure the NHS can cope, 2: A ‘sustained and consistent’ fall in the daily death rate, 3: The rate of infection slowing to a ‘manageable level’ 4: Ensuring supply of tests and PPE can meet future demand and 5: Being confident that any adjustments won’t risk a second peak.
Euro flat awaiting ECB meeting
European stock markets all closed higher by over 1% amid a generally optimistic tone across markets but that same tone was not seen in FX markets, which have slowed down as central banks make monetary policy decisions. That was even after France showed a rare piece of positive economic data, with consumer confidence holding up at 95 against expectations of a drop to 80.
The Bank of Japan made its quantitative easing program limitless on Monday, the Federal Reserve has already made that commitment, so it’s just the ECB left from the big 3. The lack of a coordinated fiscal response from European governments may force the hand of the ECB to follow suit this week.
