- Pound (GBP) is paring yesterday’s gains after lockdown is re-imposed in parts of Manchester, Lancashire and Yorkshire
- Brexit planning has gone backwards for some companies according to CBI
- Euro (EUR) slipped after German GDP showed a bigger than forecast -10 contraction
- Eurozone economy expected to have contracted -12% in Q2
The Pound Euro (GBP/EUR) exchange rate is after edging lower after advancing in the previous session. The pair settled +0.3% at €1.1054 on Thursday, after easing back from the one week high of €1.1092 reached earlier in the session. At 05:15 UTC, GBP/EUR trades -0.1% at €1.1037. The pair is on track to gain 0.7% across the week.
Second wave fears are growing. In the UK, Health Secretary Matt Hancock announced that owing to an increasing rate of transmission 4.5 million people in some parts of Manchester, Lancashire and Yorkshire are going back into a partial lockdown.
846 new daily coronavirus cases were announced in UK, the highest number of new daily infections since June 28th.
Brexit panning has also been hit by coronavirus. According to the Confederation of British Industry (CBI) one fifth of companies say planning for a no deal Brexit has gone backwards, increasing the pressure on the government to secure a deal.
Once again the UK economic calendar is light with just Halifax house price data in focus.
The Euro was out of favour across previous session after data laid bare the impact that the coronavirus pandemic and lockdown had on the economy in the second quarter of the year. Germany’s economy posted a bigger than expected -10% quarter on quarter decline in the April – June period, the worst quarterly contraction since records began in 1970. Economist had predicted a 9% contraction. Whilst the German economy is expected to recover, the pace could well be slow and painful.
Other data points of interest in the previous session included Eurozone Economic Sentiment indicator which rose more than expected in July, suggesting that the recovery is on track.
Attention will now turn to Eurozone GDP data which is due for release today. Expectations are for a -12% contraction compared to the previous quarter. This comes after a -3.6% contraction in the first three months of the year. A weak reading could drag on the value of the Euro as the reality of the hit