Pound to Euro Exchange Rate Ahead of UK Manufacturing and Services Data

GBP EUR Exchange Rate: The Week Ahead September 19th

The pound to euro exchange rate has moved back over 1.14 after a sharp fall in the price on Tuesday with losses over 1% seen for the GBP to EUR pair.

This morning sees the release of UK Purchasing Managers Index data for the manufacturing and services sectors for the month of April. The data should give some indication as to the health of these sectors under lockdown and crucially their outlook for the immediate future. A sharp decline is expected with a fall to 40 down from 47.8 in the manufacturing sector and a drop to 26.5 from 34.5 for the services sector.

Tomorrow sees UK retail sales numbers for the month of March and could result in sterling weakness on the back of a poor number which is expected.

UK Lockdown Timline to Affect GBPEUR Exchange Rate

Last night, the UK’s chief medical officer Prof Chris Whitty said that self-distancing measures will need to stay in place until at least the end of the year. He also suggested that until a vaccine is found or medicine to fight the virus then coronavirus is going to be with us for quite some time yet. The British lockdown will be reviewed in the first week of May and more volatility may come when the next course of action has been decided.

There has been much commentary over how long it will take for Britain to recover from this. The former chancellor Phillip Hammond has said that he thinks a U-turn recession is more likely than a V-shaped recession. The U-shaped recession takes longer to recover from and could weigh heavily on the GBP vs EUR pair if people decide to not spend and, in some cases, not return back to work. The virus is still at large, and this will likely impact behavioural responses to the pandemic going forward.

European Council Meeting

The European Council will meet today to discuss the latest Covid-19 developments and will also focus on how to fund the rebuilding of economies most impacted by Covid-19. There is still a big divide as to how these funds should be structured with disagreement between wealthier countries such as Germany and poorer nations to include Italy. Any developments or statements today will likely see euro volatility as the markets try to predict the long-term economic outlook for the Eurozone.

If you’d like to discuss these factors and how they could impact an upcoming currency transfer, feel free to get in touch with me, James Lovick, using the form below.