- Pound (GBP) shows resilience as covid cases surge
- BoE’s Andrew Bailey doesn’t believe the economic hit will be as severe with the 2nd wave
- Euro (EUR) under pressure as ECB minutes show policy makers are concerned over the rate of growth
- Mixed data this week showed just how rocky the path to recovery is.
The Pound Euro (GBP/EUR) exchange rate is treading water on Friday. The pair settled higher in the previous session +0.15% at €1.0997 approximately mid-way between the daily traded range. At 05:15 UTC, GBP/EUR trades just a few points higher at €1.10.
Today the latest month on month GDP reading is expected to show that the economy grew 4.6%, this is down from July’s 6.6% even though the government continued with its job retention scheme and implemented the Eat Out to Help Out. The pace of growth is clearly slowing. However optimistic comments from Bank of England Governor Andrew Baily that the economic impact won’t be as deep with a second wave underpins the Pound.
Covid cases surged over the last 24 hours with 17,540 new infections being recorded, this is up by more than 3000 compared to the previous day. 77 more people has died from the virus. Hospitalisations are at the highest level since June 22. Many parts of northern England, Wales and Scotland have seen restrictions tightened in order to stem the spread of the virus. More lockdown restrictions could hamper the economic recovery. The British economy is still struggling to recover from the deepest contraction on record in April.
The second key factor for the Pound is Brexit. There is just one week to go until Boris Johnson says that he will walk away from talks if there isn’t at least a deal outline. The pressure is mounting, and headlines remain mixed.
The Euro traded on the back foot after German trade balance disappointed in the previous session. Data this week from the Eurozone has been very mixed highlighting the rocky rod to recovery. The minutes from the latest European Central Bank meeting also revealed that the ECB were more concerned about the level of growth than initially assumed.
Today there is no high impacting Eurozone data. Sentiment will likely drive the common currency.