- Pound (GBP) steadies after falling as covid cases surge
- GDP misses forecasts & Brexit uncertainties persist
- Euro (EUR) ticks higher on US Dollar weakness
- Eurozone Q3 GDP expected to confirm +12.7%
The Pound Euro (GBP/EUR) exchange rate is consolidating losses after a steep sell off in the previous session. The pair settled sharply lower on Thursday, down -1.05% at €1.1110 after hitting a high of €1.1232 earlier in t he session. At 05:15 UTC, GBP/EUR trades +0.07% at €1.1115. Thanks to strong gains at the beginning of the week the pair is on track to book gains of 0.3% across the week.
The Pound tumbled sharply across the board as the bad news just kept stacking up. New daily covid cases in the UK hit 33,470 on Thursday as the government struggles to contain the second wave. The UK is back under lockdown and has been since the beginning of the month in an attempt to stem the spread of the virus. Businesses have once again closed their doors just as they were starting to rec over from the first lockdown.
GDP data on Thursday showed that the UK economy recorded a record 15% expansion in the July – September period as the economy reopened. The data also revealed that on a monthly basis the economy grew 1.1% in September, significantly slower than the 2.1% recorded in August.
Finally, Brexit uncertainties continue to drag on the Pound. The EU and the UK have been in talks in London across the week. Once again it appears little progress was made and the soft deadline of the end of this week has been pushed out until next week.
The Euro strengthened in the previous session thanks to a weaker US Dollar as covid cases stateside soared.
Attention is now turning towards Eurozone Q3 GDP data, which is expected to confirm the initial 12.7% quarter on quarter rebound. Whilst it is a record-breaking level of expansion it is also out of date, given that German and France are back under national lockdown meaning a double dip recession is very likely.