The British pound is lower against the euro on Friday.
- Optimism an agreement can be reached on EU recovery fund
- Markets ignore Austria and Dutch PMs who doubt deal this time
- ECB Survey shows -8.3% Europe economic slump
- GBP/EUR drops -1.91% this week
GBP/EUR was lower by 63 pips (-0.58%) to 1.10960 as of 3pm GMT. This week the pound-euro exchange rate is down by -1.91%.
The currency pair again stalled is recovery under 1.105 and subsequently turned down to make new lows for the week, dipping back below 1.10. Yesterday it finished flat at -0.01%.
GBP: Bailey: “We are seeing activity return”
Bank of England Governor Andrew Bailey said today that he was starting to see a recovery in the UK, which excluded some sectors. The housing market and new car sales have benefitted from the easing of lockdown measures but areas like hospitality, which employ a lot of low paid workers have not.
It may not have been music to the ears of workers in those same industries that Prime Minister Boris Johnson said the government will review the remaining restrictions in November, for total return to normality.
EUR: All eyes on the EU Summit
Any news around the EU recovery fund was understandably the big driver for the euro and its exchange rate with the pound. Saving some fleeting comments from two of the Prime Ministers representing the ‘frugal four’ there was not much to go on. It’s widely believed that today is for niceties and the real crunch talks kick off over the weekend.
Austria PM Sebastian Kurz said that he “I hope we’ll get a solution this summit, but if not, then at the next one.” It’s a bit of tough posturing of course and markets looked past the comments in the beleif a deal is more likely than not. Dutch PM Mark Rutte for his part, put the chances of a deal this weekend at less than 50%.
On the economic data front, the forecast by economists surveyed by the European Central Bank was a Eurozone contraction of -8.3% in 2020. Meanwhile, Eurozone June final CPI was steady at 0.3% versus the 0.3% preliminary estimate.
