The British pound is lower against the euro on Tuesday.
Having tumbled to a negative price level for the first time in history on Monday, oil markets were in trouble again on Tuesday.
The negative repercussions for financial markets of the mess in oil markets were weighing on demand for the British pound.
GBP/EUR was down by 129 pips (-1.13%) to 1.1317 as of 4pm GMT.
After initially consolidating near 1.145, the currency pair tumbled right to 1.13 for its lowest in over 3-weeks. Yesterday the exchange rate lost -0.41%, taking the weekly decline up to -1.56%.
British pound slump amid crash in global oil markets
The wild ride in oil markets has jolted markets into a sense of panic, lowering demand for the pound in the process. The pound has been a top FX performer since global markets bottomed a month ago but is starting to become unstuck as oil prices reignite uncertainties.
Specific to the economic prospects for the UK. In a podcast, the Bank of England’s Chief Economist Andy Haldane said H1 UK growth figures are set to be ‘pretty ugly’. His comments will further concerns about just how bad the economic implications are of the current lockdown, which was recently extended for three more weeks, really are.
Euro gains ground as Austria progresses with lockdown easing
The euro offered a pocket of safety in FX markets, gaining against the pound amid the rout in crude oil markets. The euro has been flat against the dollar (EUR/USD) over the last two days despite weakening global sentiment and renewed demand for dollars.
Signs of progress among the first European nations to lift lockdown restrictions was supporting the single currency. Austrian Chancellor Sebastian Kurz said his country will continue lockdown easing plans. New virus cases in Austria have stayed sub-100 per day over the past three days.
While nations across the European Union plan to ease restrictions, the travel ban in place for the Schengen Area may remain closed until the summer according to the EU’s Breton.
