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Pound struggles despite positive PMI data

22 May 2020

Despite Thursday’s release of manufacturing and services PMI, which were better than predictions, the British Pound failed to recover and continued to struggle. 

On Friday, UK retail sales data showed a decline of -22.6%, compared to the same period of time last year, applying pressure on the British currency.

Publications are hinting at a UK economy contraction during the second quarter. 

Moreover, following the Eurozone PMI reports, the European currency remained steady, ahead of the meeting in which the European Central Bank, stated that it is “fully prepared” to offer more stimulus as early as June in order to prop up the bloc’s economy.

The American dollar is being held back from growth due to the tensions between the U.S. and China. The USD was also hit by the rise in domestic jobless claims. 

In other news, the GBP/CAD exchange rate increased by 0.3% on Friday afternoon, being traded at 1.7099. 

CIBC Capital Markets’ senior economist Royce Mendes explained, “Data for March show an ugly situation even before the economy was tamped down for a full month.”