The British pound is flat against the euro on Thursday.
The euro held near recent highs but some selling near the 1.10 figure to the dollar appeared to cause a pause in its ascent. The pound held up despite the softer mood as Prime Minister Boris Johnson offered some optimism that the UK might soon be ready for ‘testing and tracing’.
GBP/EUR was higher by 6 pips (+0.05%) to 1.1152 as of 3pm GMT.
The currency pair started the day trending lower but found support well ahead of the 1.11 figure and picked up over 1.115 in the afternoon. Yesterday the exchange rate fell -0.61% leaving a week-to-date return of -0.17%.
GBP: UK Test and trace offers hope
UK Prime Minister has been coming under increasing public pressure to do better in Britain’s coronavirus response. The pound has fallen back in the past week over among other things, concerns that the high UK death toll will set back confidence and the UK economy. There was an inkling of good news on Thursday when the PM tweeted:
“We are making vast progress in testing and tracing, and I have great confidence that we will have a system very soon that will help us defeat this disease.” Boris Johnson, May 21, 2020
On the subject of confidence, there was a mixed bag of business survey data for the United kingdom released on Thursday. CBI business trends fell to -62 vs -50 expected whereas the UK flash services PMI printed 27.8 instead of the 24 forecast.
EUR: Technical pullback after gains
The euro continued its ascent against most currencies on Thursday but ran into some selling after some strong recent gains. The Euro-dollar currency pair (EUR/USD) briefly ascended a big psychological price level at 1.10 but slipped back shortly afterwards ahead the 200 day moving average, a widely followed indicator in forex markets.
The pullback in the euro coincided with the flash May manufacturing PMI from Germany missing expectations, while the re-opening in France served to help the service sector, where PMIs beat expectations.