The British pound is marginally higher against the euro on Wednesday.
- Markets in countdown to US interest rate decision
- Boris Johnson announces more easing of lockdown measures
- OECD estimates -6% slump in global economy
- The exchange rate is just higher by +0.12% this week
GBP/EUR was higher by 13 pips (+0.12%) to 1.1235 as of 3pm GMT.
The currency pair traded in a narrow 20-pip arrange between 1.122 and 1.24 for most of the day.
GBP: More UK lockdown easing
There was not much between the two currencies, with market volatility low before the US Federal Reserve decision on US interest rates and other monetary policy. As measured against the US dollar, both currencies were faring well with GBP/USD breaking above 1.28 for the first time since March 11, while EUR/USD touched last week’s high.
The prospect of the further easing of lockdown measures may have given the pound the edge. UK Prime Minister Boris Johnson has said he wants to reopen hospitality as quickly as possible, but no earlier than 4 July with the simultaneous aim of reopening pubs and cafes on 4 July.
EUR: OECD predicts -9.1% EU decline
Across broader markets, the mood was one of a pause after big gains. Adding to the sense of gloom were estimates from the OECD that there will be a -6% slump in the global economy, rising to -7.6% if there were a second wave.
Prospects for the EU economy are worse than the rest of the world according to the OECD with the Euro area expected to drop -9.1% this year. Worse still is the UK where it is projected that the economy could decline by anywhere between -11.5% and -14% if there were a second wave.
Better news from the EU was that there are plans to lift external travel restrictions from 1 July onward. Some agreements had already been made on travel within the EU so the extension to beyond the EU is welcome news for international business.
