The EURGBP interbank exchange rate this morning has ranged between 0.9260 and 0.9325, slightly below the recent high of 0.95.
The EU is now at the epicentre of the Coronavirus pandemic with over 160k cases now reported across the Eurozone, and Italy having the highest number with nearly 64k. Leading eurozone businesses are struggling to keep their doors open with the global lack of demand and lock down in many European countries.
The European Central Bank’s €750bn stimulus package has given relatively little support. Eurozone finance ministers for the first time have agreed the escape clause of the EU fiscal framework can be used. This means that countries in the EU are temporarily allowed to deviate from the regular fiscal rules. This coupled the European Central Bank’s Pandemic Emergency Purchase Programme will see significant fiscal spending by national governments.
This morning’s German Manufacturing Purchasing Managers Index (PMI) was forecast to come in at 39.6 for the month of March but came in better than expected at 45.7. German Services PMI came in lower at 34.5 versus a forecast 42.3. Later this morning at 09:00 EU Manufacturing and Services PMI data is released, and the market will closely be watching these data sets which could bring further indications on whether the euro to pound forecast is expected to move higher to lower and help people to decide should I sell or buy euros now or next week.
UK Government support
Financial support from the UK government and last night’s announcement made by the Prime Minister Boris Johnson that the UK is in lock down, seem to have helped support the pound.
Many stores have announced closures apart from grocery supermarkets as COVID-19 continues to spread. The latest Deloitte report estimated up to a 10% decline in UK GDP, which is almost 4 times greater than any other slowdown in the last half a century.
This morning UK Manufacturing and Services PMI data is released at 09:30, which might provide some early insight into confidence within businesses across the UK. The forecast is down to 45 from the previous 51.7 and 53.2 reading respectively.
This will act as a precursor to tomorrow’s key inflation data which might draw a particular amount of attention given the amount of monetary stimulus being put forward by the government and the Bank of England.
For euro sellers the market is looking attractive compared to where it has been in the last 12 months. For euro buyers, they might be asking whether they should buy euros today or wait? Unfortunately, while we are experiencing the current uncertainty only time will tell.
If you’d like to find out more about the potential ramifications on the EURGBP interbank exchange rate, or would like to ask another question feel free to contact me using the form below.