RationalFX: Sterling strengthened against both the Euro and Dollar on Thursday, even after poor PMI data for April.
Market activity seems to be immune to new data about the disastrous economic fallout from the coronavirus. The purchasing managers index (PMI) reading for April fell to a record low of 12.9 from 36 in March. The scale of the collapse shows a huge contraction in the British economy and will add doubts to whether financial help from the government has reached businesses quickly enough.
As Britain’s lockdown measures limit people’s ability to live, work and spend money as normal, economists expect the country to see its worst economic contraction in more than 300 years. Bank of England official Jan Vlighe said that Britain’s economy was experiencing possibly its deepest economic shock in several centuries and a quick bounce-back once the lockdown eases was unlikely.
The euro fell to its lowest in a month on Thursday after data showed economic activity in the euro zone has suffered dramatically due to the government-imposed lockdowns to stop the coronavirus pandemic. The single currency fell by 0.6% against the US dollar as PMI readings sank to its lowest since records began.
Furthermore Angela Merkel told fellow leaders that Germany is prepared to make a substantial financial contribution to help relaunch the region’s economies after the coronavirus pandemic as member states asked the European Commission to create a ‘recovery fund’. Furthermore she went onto say the EU needed to prevent an asymmetric economic recovery once lockdowns ease and is prepared to launch a huge common effort worth 1 trillion euro’s. Leaders agreed to establish a recovery fund but are unsure at the moment of its size and whether it should be handed out as loans or grants.
7:00 – GBP – Retail sales – Forecast at -4.5% from previous -0.3%
1:30 – USD – Core durable good orders m/m – Forecast at -6.1% from previous -0.6%
Source : ETFWorld.co.uk