The Pound to Euro (GBP/EUR) exchange rate traded in a wide range last week as a stunning collapse in oil prices and a record drop in private sector growth rocked markets.
Pound Slumps to Two Week Low as Markets Spooked by Oil Rout
The Pound stumbled out of the gates last week, with the GBP/EUR exchange rate plunging to a two-week low as Sterling got caught up in the market sell-off triggered by the collapse in US oil prices.
However, the Pound was able to mount a comeback in the second half of the week on the back of improving market sentiment, which saw GBP investors overlook some gloomy UK economic data’
Meanwhile, the Euro enjoyed a solid start to the week, as EUR investors cheered some surprisingly positive ZEW surveys which revealed a surprising rebound in German economic sentiment this month.
But the Euro would find itself relinquishing almost all of these gains through the latter half of the week as some truly abysmal PMI figures and the failure of EU leaders to agree upon a comprehensive coronavirus recovery package took its toll on the single currency.
ECB Policy Meeting and Eurozone GDP Figures in Spotlight
Looking ahead to this week, its looks to be a busy session for EUR investors as the European Central Bank (ECB) holds it latest policy meeting and we get our first look into how the Eurozone economy fared in the first quarter of 2020.
In terms of the ECB we aren’t expected any policy changes from policymakers next week, but we could see the bank detail plans to increase its stimulus measures in the months to come in an effort to support the Eurozone’s recovery from the coronavirus crisis.
On the GDP front things are looking pretty bleak, with economists forecasting the Eurozone economy will have shrunk 2% in the first quarter after most of the bloc went into lockdown, and likely to limit the appeal of the Euro.
Meanwhile, in the UK GBP investors will be looking to the government to provide some clear details on its lockdown exit strategy, with any upside in the Pound likely to remain capped while uncertainty hangs over when and how restrictions may be lifted.