- UK GDP -2% Q1 vs -2.5% exp.
- BoE could do more to support economy
- German inflation to +0.4% MoM, Spain -0.7% MoM
- GBP/EUR trade -0.05% at €1.1296 at 06:15 UTC >> Real time exchange rates
The Pound is creeping lower after ending the previous session flat versus the Euro. The Pound Euro exchange rate settled on Wednesday at the supportive level of €1.1300.
At 06:30 UTC, GBP/EUR is trading -0.05% at €1.1296 amid weak UK fundamentals including poor data, coronavirus statistics & Brexit and as investors look ahead to German inflation data.
The pound is on the back foot as England cautiously begins easing its lookdown measures. People who haven’t been able to work have started to return to work whilst data revealed the devastating impact that the lockdown was having on the UK economy.
The UK economy contracted by a better than forecast -2% in the first quarter of the year. However, this only included 2 weeks of lockdown. The worst is yet to come with the BoE predicting a -14% economic contraction this year. The central bank governor Andrew Bailey hinted again in an ITV interview at more central bank easing to help shoulder the cost of the coronavirus outbreak.
Brexit headlines are also flashing mixed messages as talks continue across the week. According to the Guardian newspaper, the Government has, in private, conceded on post Brexit checks on goods in the Irish Sea, months after Boris Johnson said that there would be no such barriers.
There is no high impacting UK data due for release today. Investors will continue monitoring coronavirus statistics and the impact of the gradual easing of lock down measures.
The Euro pushed higher later in the previous session as the European Commission announced that they are working on an ambitious plan to help economies on the road to recovery. Ursula von der Leyen, the President of the European Commission hasn’t yet revealed the recovery instrument proposal as it is still being revised by EU officials. Member states are fighting over how to fund this project.
Today investors will look ahead to Germany inflation data for April. Analysts are expecting a 0.4% increase in inflation month on month, and 0.8% on an annualised basis. This will be in sharp contrast to Spain inflation data which is expected to show -0.7% drop in April, compared to just 0.3% increase on an annual basis
