The British pound is flat against the euro on Tuesday.
- UK relaxes social distancing, pubs to reopen July 4th
- UK & Eurozone PMIs top expectations
- EU leaders to hold in-person meeting on recovery fund July 17-18
- Pound-euro exchange rate is unchanged (0.00%) this week.
GBP/EUR was lower by 10 pips (+0.09%) to 1.1056 as of 3pm GMT.
The currency pair made an early run at 1.11 but fell short and tumbled to just above 1.10 and rebounded again. Yesterday was an equally directionless day of trading, finishing +0.11%.
GBP: UK relaxes social distancing measures
As widely anticipated Boris Johnson’s government announced the relaxation of social distancing rules and the reopening of large parts of the UK tourism and hospitality industry beginning July 4th. The news was largely already priced into the pound since July 4th had already been set as a tentative target by the government previously.
Johnson admitted that “there will be flare ups” but said “local measures will be needed to deal with such cases” – the implication being that there will not be another country-wide lockdown if there is a second wave.
EUR: New EU summit set for mid-July
Indeed, the German state of North Rhine-Westphalia imposed a lockdown for Gütersloh after a new virus outbreak in the area caused the country’s R-rate to spike. However, the rest of the country will continue to reopen for business.
Economic data impressed in both the UK and Eurozone on Tuesday – with PMIs from both economies exceeding expectations. The UK June flash services PMI rose to 47.0 versus the 40.0 expected and well up from the 29.0 in May. In the Eurozone the flash services PMI rose to 47.3 versus 41.5 expected and 30.5 prior.
Markit, the firm that compiles the PMI data summed it up nicely saying “Output and demand are still falling but no longer collapsing.”
An announcement today that EU leaders will meet again in person to discuss the EU Recovery fund keeps some hope alive that the fund will eventually be created.