The pound to euro exchange rate has retreated lower again with rates pushing below 1.1450 for the GBP vs EUR pair. Those looking to buy euros have seen some of the best prices available over the last month.
UK Manufacturing Index Falls to Lowest Levels in 30-Years
UK Purchasing Managers Index data for the manufacturing sector for the month of April has fallen to its lowest level in thirty years. Activity in the manufacturing sector fell to a record low of 32.6. Investors are trying to forecast the extent of the hit to GDP (Gross Domestic Product) as a result of coronavirus and these surveys for the different sectors of the economy are insightful.
UK mortgage approvals release by the Bank of England have also fallen dramatically raising more concern for the UK economy. Approvals fell to 56,200 in March, the lowest level since March 2013 which highlights a severe decline in housing market activity. UK housing is one anchor of the British economy and with property transactions almost entirely on hold there are concerns that there could be a price correction with a drop in prices as a result of Covid-19.
Lack of Brexit Trade Progress Weighing on Sterling
Brexit meanwhile is becoming more heated with the thorny issue of fisheries proving a stumbling block for UK and EU negotiators. Last Friday the EU’s chief negotiator Michel Barnier said that trade discussions have been disappointing so far and suggested that Britain was running down the clock before the end of the transition period at the end of this year. He said that Britain is not discussing details which are of importance to the EU. As coronavirus settles down globally the focus will move more and more on to Brexit in the months ahead of that crucial deadline.
Gloomy ECB Forecast for the Eurozone
European Central Bank President Christine Lagarde said yesterday that the EU economy could shrink by as much as 12% after weak official data. The Spanish economy which has been particularly badly hit from coronavirus contracted by 5.2%, the steepest fall ever recorded. Whilst the European Commission have set aside funds for a recovery fund there is still a lack of important detail. It is still yet to be decided how the recovery funds for indebted nations will be funded and structured. Any developments here are likely to see considerable volatility for pound vs euro exchange rates.
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.