The EUR/GBP exchange rate opened Tuesday’s trading session on a rather gloomy outlook that was largely influenced by the expectations that Germany’s industrial sector will continue to experience a decline.
The reports of negative factory orders in Germany sparked a slight bearish run on Tuesday morning’s trading session. This was after a report that February’s factory orders in the country dropped to 1.4% from the previous 4.8%. Germany is the largest economy in Europe, thus when its economy is affected, that is bound to also have an impact on the Euro’s performance. In this case, the EUR/GBP experienced a slight drop on Tuesday.
The reason for the decline is that analysts expect that the German economy to continue taking a hit from the economic fallout caused by the coronavirus. This will undoubtedly have a bigger impact on the country’s industrial sector and so it is inevitable that the EUR/GBP will continue to be affected especially as the Euro continues to weaken.
The EUR/USD currency pair opened Tuesday’s morning session at 0.8832 before an overall bearish trend that saw the price fall to 0.8800 by around 8 am. However, the price has since then bounced back and it has so far hit the day’s high at 0.8852.
The price recovery after the slight downturn indicates that the news may not have had a major impact on the currency pair, perhaps because the impact already played out over the past 3 or so weeks. The EUR/USD’s performance will likely experience a strong downturn fueled by the continued decline in Germany’s industrial sector for the next few months if the coronavirus continues to ravage the economy.
The Ministry in Charge of Germany’s economy released a statement pointing out that the country’s industrial recession ended before the coronavirus outbreak. The ministry, however, noted that the industrial sector will likely experience order shortfalls in March, as well as April courtesy of the pandemic and that it will also negatively affect production.