- Pound (GBP) supported by both fiscal & monetary stimulus
- BoE added £150 billion to the QE programme
- Chancellor Rishi Sunak extended the furlough scheme until March
- Euro (EUR) turns to German industrial production numbers
The Pound Euro (GBP/EUR) exchange rate is edging lower on Friday, paring some of Thursdays gains. The pair settled 0.3% higher in the previous session at €1.1108 after falling to a weekly low of €1.1027. At 05:15 UTC, GBP/EUR trades -0.1% at €1.11.
The British Chancellor Rishi Sunak and the Bank of England ploughed more money into the economic rescue in a coordinated move on Thursday on the same day that the UK enters its second lockdown.
As covid cases rise and the UK began a month-long lock down fears are growing over the impact on the labour market and the broader economy. Rishi Sunak extended the generous and costly furlough scheme until the end of March whilst also announcing billions of pounds in other forms of support.
Earlier in the day, the Bank of England had voted unanimously to keep interest rates on hold but to add a further £150 billion into its bond buying programme. This was above the £100 billion that had been expected.
The Bank of England also downgraded the UK’s GDP projections with a contraction now expected in the final quarter of the year. Unemployment is expected to rise to 8% by the second quarter of next year, significantly above the 4.5% where is currently sits.
There is no high impacting data due to be released. Brexit talks are also ongoing, which is being interpreted as a good sign, despite no actual progress being reported.
The Euro traded broadly higher versus its major peers, although fell versus the Pound, as it benefited from a weaker US Dollar.
German factory order data revealed that manufacturing orders grew for a fifth straight month, although momentum slowed in September. Orders rose 0.5%, down from 4.9% growth in August.
Attention will remain on Germany, with the release of industrial production figures from the Eurozone’s largest economy. Expectations are for a solid 2.7% month on month increase.