The Pound to Euro (GBP/EUR) exchange rate made some solid gains this week as the coronavirus crisis continued to dominate market sentiment.
Pound Pops as Boris Johnson Discharged from Hospital
The Pound got off to a solid start this week, with Sterling sentiment rising sharply following the news that Boris Johnson had been discharged from hospital.
However, the Pound struggled to translate this initial surged into a sustained move higher as the reemergence of Brexit uncertainty in the latter half of the week capped the upside in GBP exchange rates.
This came as the UK re-iterated its commitment to exiting the Brexit transition period at the end of 2020, quashing calls from the head of the IMF to consider a delay as to not add more uncertainty to the global economy.
Meanwhile, the Euro found some limited support through the first half of the week as a number of Eurozone countries such as Spain and Italy began to make cautious steps towards reopening their economies by allowing some non-essential workers to return to work.
However, EUR sentiment began to sour again by the end of the week as investors raised concerns about the lack of coordination between Eurozone members in how they were looking to exit their lockdowns, as it cast further doubts over EU unity.
PMIs to Shed More Light on Economic Impact of the Coronavirus Crisis
Looking ahead to next week’s session, investors are likely to pay close attention to the latest economic releases.
Of these, the main focus is likely to be on April’s preliminary PMI figures from both the UK and Eurozone as they help provide more insight into how the coronavirus crisis is likely to have impacted their respective economies.
In both cases economists are forecasting that growth in the private sector will have slumped to a new record low as the coronavirus lockdowns brought economic activity to its knees, potentially infusing more volatility into the GBP/EUR exchange rate.
Other data in focus will include the UK’s CPI figures, with GBP investors bracing for a sharp slump in inflation last month.
Meanwhile, also influencing the Euro will be the latest ZEW economic surveys, with sentiment in the Eurozone predicted to have deteriorated even further in April.