Pound to euro exchange rates have moved higher this morning reaching 1.1465 at its highest on the interbank exchange as Prime Minister Boris Johnson addressed the UK yesterday evening with a pre-recorded message about the changes to the UK coronavirus lockdown.
Little information was provided so all eyes will be on parliament today when it will be providing further guidance as to the new measures as well as answering questions from the public.
The questions will start at 3:30pm with MP’s asking questions first, questions from the public will follow later on in the evening. Boris Johnson suggested that the UK will adopt a 5-point plan with level five the most critical and 1 being when the UK is in the clear.
Suggestions are that that some school pupils will be allowed to go back including those in year 1 and year 6. There appear to be disagreements within the UK as to how the leaders will look after their own country with Nicola Sturgeon unhappy with some of the ideas proposed by England and she has confirmed that the stay at home message will continue to apply north of the border.
The pound has remained stable against both the euro and the US dollar after finding support towards the end of the week and news that the UK is slowly opening up once again has helped to reinforce the value of sterling.
During the lockdown the pound to euro exchange rate has moved by as much as 11 percent which highlights the importance of getting the timing right when making a currency transfer. This also highlights how important it is to be kept up to date with what is happening with exchange rates.
Boris was keen to send the message that if you cannot work from home then it is important to do what you can to get to work including both construction and manufacturing industries.
Towards the end of last week, the eagerly anticipated Bank of England meeting was held on Thursday. The central bank kept interest rates on hold at 0.1% and keeping Quantitative Easing measures at £645bn. This allowed the pound to keep hold of its recent gains vs the euro as there were some suggestions that the central bank was ready to make further policy changes.
Economic Data to Set the Tone for Sterling to Euro Exchange Rates
Looking forward to the week ahead and the UK will publish it latest UK GDP figures for the first quarter. The expectations are for a fall in growth to -1.6% year on year and this could cause movement for GBPEUR exchange rates if the data comes out differently.
Clearly, the figures are going to be very low and concerning but the same will be true worldwide at the moment so they may not have the typical influence on rates that one may have expected previously.
Wednesday also brings with it the latest UK manufacturing data as well as industrial production data for the UK, both of which are expected to show sharp falls.
Indeed, as the UK only went into lockdown on 23rd March the GDP figures during the first period will not truly measure the problems caused by the pandemic but as we move further into the month of May we will begin to see what happened the previous month when April’s figures start to be released by both the UK and the Eurozone.
Later this week, the Eurozone will announce its own GDP figures on Friday afternoon with forecasts of a drop to -3.8% for the quarter on quarter GDP data. The Eurozone moved quicker than the UK in terms of the lockdown process so it is little surprise to see the data worse than the UK’s data so it is important to see what happens towards the end of the week with this data release.
Meanwhile, Germany’s constitutional court has questioned the legality of the ECB’s enormous fiscal stimulus measures in light of the pandemic. The courts in Germany have given the central bank a period of 3 months to justify the reasons behind its policy and this could cause Germany to reduce its participation in the scheme which could be disastrous for the bloc in the Eurozone.
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