The pound to euro exchange rate remains rangebound as coronavirus concerns continue to cause economic concern both in the UK and throughout the eurozone. Investors are set to trade with caution following the results of Friday’s nonfarm payrolls data in the US, and in advance of the impending Federal Open Markets Committee meeting.
On Friday the nonfarm payrolls data, which covers the current standing of goods, construction and manufacturing businesses in the US, revealed that the unemployment rate had actually dropped in the country, to 13.3 percent, despite the ongoing economic crisis.
However, with the FOMC meeting set for Wednesday, all eyes will remain on the decision reached and any new policies that are made as a result.
Though both occurrences directly impact the US, the ripple effect will certainly weigh on European currencies.
In light of this, the pound has made little headway in the last 24 hours.
World Bank president David Malpass described the effects the pandemic has had on the global economy as “a devastating blow”.
Speaking on BBC Radio 4’s The World This Weekend, he said: “The combination of the pandemic itself, and the shutdowns, has meant billions of people whose livelihoods have been disrupted. That’s concerning.
“Both the direct consequences, meaning lost income, but also then the health consequences, the social consequences, are really harsh.”
However, the UK is pushing forward in relaxing lockdown after almost 12 weeks of government-enforced “stay at home” orders.
It is hoped that non-essential retail outlets will open on June 15, followed by other non-essential businesses including pubs on July 4.
Domestic holidays are also anticipated to restart in July, with caravan and campsites gearing up to welcome back guests with new social distancing measures in place.
Meanwhile, despite dipping out of the spotlight for a moment, Brexit is back on the agenda, with the UK and EU leaders continuing to battle it out to agree on a deal.
The UK government has until the end of the month to ask for an extension to the current transition period, though the Prime Minister has vowed he will not.
Jeremy Thomson Cook, Chief Economist at Equals (formerly known as FairFX) said: “High-level talks in a few weeks between Boris Johnson and Ursula von der Leyen may be enough to break the impasse but with both sides devoted to playing a game of chicken, the likelihood of an accident remains high.
“An extension seems the logical choice given the pressures that COVID-19 has put on both businesses and the political apparatus of the UK and EU.”
He added that a threat of no-deal remains.
Mr. Thomson Cook added: “Sterling remains spectacularly blasé to the risks of a no-deal Brexit which sits a mere few weeks away.”
Published at Tue, 09 Jun 2020 06:52:00 +0000