The GBP/EUR has seen some record levels of volatility over the past 30 days which vast swings in both directions driven by the ever changing and increasing severity of the Coronavirus developments. The rate through the second half of March stood at 1.05 on the 19th March following UK PM Johnson’s speech about social distancing. Since that point in time, the Euro has been experiencing losses against several currencies such as the safe haven US Dollar in the back end of last month which was bolstered by Sterling’s almost exponential yet consistent gains at the back end of the month. This has now resulted in the current midmarket levels floating around the 1.14 market and showing no signs of slowing.
COVID-19 Cases in the UK Increases
However, with that in mind, the UK experienced yet another record COVID-19 day yesterday bearing the brunt of an additional 563 deaths in 24 hours bringing the total to 2352. Whilst this is still a long way off the Eurozone’s 30,000 deaths, there has been scrutiny over the lack of ventilators and virus test kits introduced by the government. In the first remark, ventilators are been thinly distributed across an accelerating volume of hospital patients and so demand is skyrocketing for this equipment to help reducing the respiratory problems associated with the virus. In the latter remark, Professor Paul Cosford of Public Health England stated that the virus testing has not “got to the position yet that we need to get to”. This suggests that there is a pool of unrecorded cases which could spur on Sterling weakness if markets believe the number of cases and deaths is vastly unreported.
Economic Data to Influence the Euro
In terms of economic data, the Eurozone has seen many more releases than the UK with Harmonised Consumer Price Index, Core Consumer Price Index and Unemployment Rate and Change this week whilst the UK only received GDP release earlier tis week that recorded no growth for Q4. Whilst that is not positive, it does not represent a contraction alongside Europe seeing growing unemployment figures from the escalating Coronavirus. The one-sided negative data released will be adding fuel to the fire for the growth that the GBP/EUR have seen recently.
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