- Weak German GDP Data
- ECB Stimulus Package
- DEFENSIVE Sterling Pound
EUR/GBP pair continues to retract from one-week highs of £0.900 as a wave of weak economic data continues to take a toll on EUR strength in the forex market. Weak GDP Data from Germany is the latest economy release to trigger selloff on the pair on fuelling concerns over the health of the EU economy.
Weak GDP Data
Germany statistics office has confirmed that the country’s GDP shrunk by 1.9% in April, the worst contraction since the 2009 financial crisis. The economy was also down by 2.2% year-on-year due to the lockdown implement by the government to curb the spread of the coronavirus.
Traders reacted to the weak economic data sending the pair lower. The sell-off persisted in early Tuesday trading session with the pair dropping to lows of £0.8908 amidst soaring bearish pressure.
Amidst the underperformance, EUR has remained resilient against the British Pound in recent weeks. The ECB moving to cushion the economy with a wave of stimulus packages have helped bring some optimism as the COVID-19 pandemic continues to cool off.
The ECB has already mobilized a range of measures to mitigate a potential financial crisis fueled by the COVID-19 pandemic. A 750 billion euro Pandemic Emergency Purchase Scheme has so far helped cushion the battled single currency economy.
Weakness in the Sterling pound has also helped avert a further slid in the EUR/GBP pair. The British Pound has remained under pressure in the currency market as a wave of weak economic data continues to raise concerns about the U.K’s economy. U.Ks economy has felt the full force of the COVID-19 pandemic a number of economic activities having come to a halt due to the lockdown instituted to curb the spread of the virus.
The Sterling Pound also remains on the defensive amidst bitter wrangling in the ruling party. British Prime Minister’s Boris Johnson is under immense pressure to fire his trusted aide Dominique Cummings over claims he violated lockdown restrictions during the Coronavirus lockdown.