Last week saw the pound to Euro exchange rate rising to a three-week high as the Euro lost ground on the lack of investor’s confidence in the Eurozone’s economic response to the COVID-19 pandemic.
Eurozone Manufacturing Purchasing Managers Index (PMI) data gave its lowest readings ever on record, and Italian Services PMI dropped to 17.4, on a scale of 1 to 100 where anything below 50 represents a contraction. Another record low, presenting a major problem for policy makers ahead.
These record lows are indicative of the greater economic concerns ahead in Europe, and against what has been a resurgent sterling, GBPEUR interbank rates rose to 1.1439 at their peak. Understanding the events behind the movements can help us to try and understand what we might expect for the week ahead.
Sterling may remain sensitive to the economic data too
Sterling is not immune from the uncertainty and the week ahead contains fresh UK Gross Domestic Product (GDP) data and also Trade Balance figures. The data last week for sterling was also poor but it was the increase in sentiment which really saw sterling rising.
The improved sentiment was down to the extensive measures taken by the UK Government to boost the economy, which were seen in good light when compared to the lack of coordinated action by the Eurozone.
The currency markets have been very volatile in recent weeks as investors adjust to the changes in the global economy caused by the Coronavirus. With 1.2 million cases and over 64,000 deaths reported globally, national lockdowns of citizens are being enforced restricting business and economic activity.
Much of the concern last week for the Euro centred around ‘Coronabonds’, or the issuance of single Eurozone debt. The poor economic situation is shining a light on wider concerns in the Eurozone and such topics may well form the conversation again this week with the latest European Central Bank meeting minutes on Thursday.
Pound to euro rates have proved very sensitive to the latest news on COVID-19, reacting with sudden movements making predictions very difficult. We seek to offer expert commentary and guidance as to the latest factors driving the levels, to help you make an informed decision about the types of strategy that might work best.
We remain very much operational to assist with any international money transfers throughout this time. If you would like to discuss the markets in more detail, please do contact me directly using the form below with an outline of your situation; I will be happy to contact you personally.