- Pound (GBP) rebounds as drive through cinema’s, zoos and safari parks can all reopen
- BoE Sir John Cunliffe mentioning of negative interest rate dragged on the Pound yesterday
- EZ GDPP data was slightly ahead of expectations
- At 06:15 UTC, Pound to Euro (GBP/EUR) trades +0.1% at €1.1236
The Pound is ticking mildly higher at the start of Wednesday, after falling in the previous session. The Pound settled lower on Tuesday, -0.3% at €1.1226.
At 06:15 UTC, GBP/EUR is trading +0.1% at €1.1236 as the focus returns to reopening Britain ahead of a quiet day data wise.
British business secretary Alok Sharm took over the Covid-19 government press conference on Tuesday evening and confirmed that all shops can go ahead and reopen on 15th June. This is offering some support to the Pound, as is news that drive through cinemas, zoos and safari parks will also reopen.
Today’s more upbeat tone comes after Bank of England deputy governor Sir John Cunliffe struck a down beat note when he spoke yesterday. His comments that the BoE was considering negative interest rates weighed on the Pound.
Today there is no high impacting UK economic data meaning that the Pound could be sentiment driven. Looking ahead Pound traders will focus on Friday’s GDP data. Analysts are expecting the UK economy to have contracted 18.4% in April, well down from 5.9% contraction in March.
The Euro trended higher across the board on Tuesday, boosted by better than expected Eurozone GDP data. According to Eurostat the Eurozone economy contracted by -3.6% in the first quarter, a slight improvement on the -3.8% forecast. Household consumption was a strong negative pull on economic activity, as domestic demand literally evaporated overnight with the start of the lockdown.
The better than forecast GDP reading overshadowed the worse than expected German trade data which showed that that German exports sank -24% month on month in April. To put this into context, it took 5 months during the financial crisis for German exports to drop by a similar amount. Meanwhile, imports dropped -16.5% in April, slightly below the -16% forecast.
It has been widely acknowledged that April is the bottom for the bad data and things are showing signs of picking up in May. Mobility data is already showing a notable pick up in activity across the region as lock down measures ease.
Today there is little on eurozone economic calendar for investors to focus on. Sentiment will drive the euro.
