- UK household spending -40% in April vs 30% forecast
- Brexit talks continue to exert pressure amid little progress
- Italian industrial production tanks 30%, PM Conte struggles to finalise rescue package
- GBP/EUR down -0.1 slips below €1.14 at 06:15 UTC. Real exchange rates
The Pound is extending losses against the Euro in early trade on Tuesday. The Pound Euro exchange rate settled on Tuesday -0.37% at €1.1415, after picking up from the weekly low of €1.1355.
At 06:15 UTC, GBP/EUR is trading -0.1% at €1.1397, slipping through support at €1.14 on fears that the UK downturn could be deeper than predicted.
The Pound is slipping lower as confusion surrounds Prime Minister Boris Johnson’s lockdown easing plans and as real time data for UK finances in April lockdown point to a much deeper downturn than forecast. Real-time data taken from a large survey of bank accounts indicated that household spending dropped by more than 40%. This is actually worse than the 30% decline that the Bank of England predicted, pointing to a harder hit than the BoE warned of. Last week the BoE warned the UK was heading for its worst recession in 300 years. The findings could encourage he government to attempt to ease lock down measures more quickly.
Brexit talks, which stated yesterday and will continue across the week could keep pressure on sterling. These are the penultimate round of Brexit trade deal talks before the June deadline for extending December 31st deadline. Little progress appears to have been made on major sticking points raising the prospect of a cliff edge Brexit at the end of the transition period.
There is no high impacting UK data due for release today. Investors will look ahead to the release of a slew of data tomorrow. The most closely watched will be the UK GDP reading. Analysts are expecting a contraction of -7% in March on a monthly basis, which includes 2 weeks of lockdown.
Whilst the euro moved higher versus the Pound in the previous session, it was broadly under pressure amid risk aversion as fears of a second wave of infections grew and data painted a dire picture of the Italian economy.
According to data from the National Statistics Bureau Istat, industrial production tanked 30% in Italy in March. The data came as Prime Minister Guiseppe Conte struggled to finalise a €55 billion stimulus package to rescue the economy devastated by lockdown.
There is no high impacting eurozone data today. However, investors will continue monitoring the easing of lockdown measures, particularly in Germany where the number of infections are slowly creeping higher and the R is at 1.07.
The eurozone economic calendar remains light with just Industrial production data due on Wednesday.
