The British pound is flat against the euro on Monday.
- Lagarde says ECB pandemic response is ‘proportional’ to ‘severe risks’
- Germany industrial production in April worst on record
- UK roadmap has non-essential shops reopening June 15
- Pound-euro exchange rate (GBP/EUR) gained +0.87% last week
GBP/EUR was lower by 6 pips (-0.05%) to 1.1223 as of 3pm GMT.
The currency pair fluctuated in narrow ranges around opening levels.
GBP: Haldane says UK economic activity ‘collapsed’
The Bank of England’s Chief Economist Andy Haldane was painting a gloomy picture of the UK’s labour market, which might have pulled on Sterling. Haldane described economic activity has having ‘collapsed’ saying the BOE sees a possibly unprecedented level of inactivity in the labour market with 8 million British workers on furlough schemes.
The progress countries are making on reopening the economy remains an important driver of currencies. Prime Minister Boris Johnson’s spokesman confirmed there was no change on plans to reopen nonessential retail shops from June 15, conditional on the state of the outbreak. Pubs, bars, restaurants and cafés are to follow later on July 4.
EUR: Christine Lagarde testifies to EU Parliament
ECB President Christine Lagarde said the latest huge increase in central bank stimulus for Europe was justified by huge risks the economy faces from the coronavirus pandemic.
“Our crisis-related measures are temporary, targeted and proportionate … to the severe risks to our mandate that we are facing.” ECB President Christine Lagarde
Lagarde’s appearance today at the European Parliament has particular political interest after the German constitutional court last month called into question the proportionality of the ECB’s latest bond-buying program named the PEPP. Lagarde said she was confident a good solution will be found on German court and that the ECB will provide any help needed on the German rolling. The soothing tone will have gone some way to comfort euro-traders worried that an EU institutional punch up adds risks to the euro area.
Data from Germany was disappointing and shows a long road ahead for German industry. German Industrial production for April fell by -17.9%, the most on record.
