- EUR/GBP turns bearish contrary to expectations
- 500 billion euro recovery fund fails to give the Euro the upper hand.
- Germany’s ZEW economic sentiment survey was better than anticipated.
The EUR/GBP was off to a bearish start on Wednesday morning after the Euro failed to gain significant support from the improving German economic sentiments. Germany is the largest economy in the Eurozone, and investors switched to more positive sentiments regarding its economy thanks to a recently revealed plan to use a recovery fund worth 500 billion euros to support economic recovery. The fund was proposed by Germany and France with the aim of supporting European economies that have been affected the most by the coronavirus pandemic. The Euro continued to slip against the Pound Sterling despite news improved sentiments.
Investors will likely favor the Euro over the GBP in the next few days, especially with the upcoming retail sales data for the UK in April. There is a likelihood that the data may not have as big an impact as expected, considering that the Eurozone inflation data for April is also coming up. Either way, both reports are expected to indicate negative performance, and so the impact on both currencies might not be as profound, especially since it is expected.
The UK and the Eurozone have also been contending with the Brexit issue which has resurfaced at a time when the world is fighting against the coronavirus. Both economies are hard at work, trying to combat the resulting economic decline.