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Euro fails to continue building momentum

14 Jul 2020

After news claiming that Germany’s economy has “passed its lowest point” and the Euro was trading higher in yesterday session. Investors were disappointed to see that Germany’s ZEW Survey of Economic Sentiment for July was lower than expected, at 59.3.

ZEW President Professor Achim Wambach explained, “The outlook for the German economy largely remains unchanged compared to the previous month. After a very poor second quarter, the experts expect to see a gradual increase in gross domestic product in the second half of the year and in early 2021.”

On the other hand, the British Pound plunged due to the uncertainty that Brexit is presenting. Traders fear a no-deal Brexit as July’s ‘intensified’ trade talks failed to reach an agreement. The currency was also impacted by reports conveying that the UK GDP not reaching expectations in May. 

The Pound to Euro exchange rate was trading close to 1.104 this morning, declining by 0.2%. The disappointing figures related to the UK’s GDP cleared hopes for a V-shaped economic recovery. 

Chief economist at Deloitte, Ian Stewart said, “The bounce-back from COVID-19 has got off to a disappointing start. The pace of activity will have picked up sharply in June as the easing of the lockdown got underway. The chances of a quick return to normal, of the famed V-shaped recovery, are falling.”