Sterling for the euro and a moment of apathy for relief.
Having a surprisingly successful week, Sterling was not worried this week. It strengthened at an average of 0.5% in the eight-day week, losing only the Australian Dollar and Japanese Yen mismatched. This includes one euro cent and one and eighth US cents, a 0.9% gain in both cases.
To fully recover, PM Boris Johnson left the hospital and withdrew his country of residence checkers. Foreign Secretary Dominic Rabb is still the de facto leader, and announced a three-week extension to the lockdown. The five main criteria must be met before the UK lockdown can be lifted, and they seem far away for now. Economic news this week was bleak to say the least, but investors did not find it too unfair, perhaps because the rest of the world is in the same boat.
The Office for Budgetary Accountability (OBR) sees the UK economy shrink by 13% in 2020. The OBR report estimated that some other forecasters reported on-quarter growth OBR-35% in the quarter to KPMG’s best quarter. Case scenario of -2.1%. Predictions need to be estimated at high volumes, for example, how long the UK is in lockdown, the larger the economic hit.
Other figures of note include a report from the British Retail Consortium that said March brought “the worst drop in retail sales on record.” Many jobs are at risk within the hospitality and retail sectors as well as their supply chains. Despite the gloom, sterling was broadly stable against the euro.
UK imports fell by £ 10.1 billion in the three months of February, with exports of £ 3.5 billion, a trade surplus of £ 1.4 billion. While the data were better than expected, the relevance of the data (since February) is minimal.
After much upset, the EU finance ministers reached a compromise and managed to reach an agreement on financial aid. The € 500 billion relief package is for European countries most affected by the tragic Kovid-19 epidemic such as Italy and Spain. The plan includes the exploitation of the European Stability Mechanism for about half the amount, the balance coming from the European Investment Bank and the European Commission. There is disappointment in some quarters that the Netherlands and others are resistant to the notion of shared debt, but at least they managed to get something from the blocks. The euro weakened by an average of 0.3% over the long weekend, giving Sterling one-fourth of one percent.
European Commission President Ursula von der Leyen offered a heartfelt apology to Italy for “letting it down” at the beginning of the Coronavirus on behalf of the EU. No European Union country responded to Italy’s initial call for assistance through the block’s emergency mechanism. Fresh evidence has shown that some European countries have indeed acquired herd immunity of any kind, as some have begun to take measures for lockdown, although this occurs cautiously and slowly.
The economic data for the euro area were completely oblivious, but sultry. The International Monetary Fund sees an annual contraction of 7.5% in Euroland and 7% in Germany. German inflation slowed from 1.7% to 1.4% as expected. Uroland’s industrial production declined by 0.1% in February and by 1.9% in the same month last year. The euro was equally sluggish, held steady against the US dollar and lost one percent to sterling.
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