The Great Britain pound rallied against the very weak commodity currencies but fell against majors today. The sterling was under pressure from extremely poor domestic macroeconomic data and Brexit worries but had some support from hopes for an end of the quarantine period.
The Nationwide House Price Index rose 0.7% in April on a seasonally adjusted basis. The positive result surprised experts as they were counting on a drop of 0.3%. Furthermore, the annual growth accelerated from 3.0% in March to 3.7% last month — the fastest rate of increase since February 2017. The report admitted, though, that the “impact of pandemic will not be fully captured in this monthâs data”.
The seasonally adjusted IHS Markit/CIPS manufacturing Purchasing Managers’ Index tumbled to the record low of 32.6 in April from 47.8 in March according to the final estimate. It was slightly below the consensus forecast of 32.8 and the preliminary estimate of 32.9. The report commented on the extremely weak reading:
The public health emergency caused by the outbreak of coronavirus disease 2019 (COVID-19) caused substantial disruption across the UK manufacturing sector and its supply chains in April. Manufacturing production, new orders and employment all contracted at the fastest rates in the 28-year survey history, while vendor lead times lengthened to the greatest extent so far. The global pandemic also hit overseas demand, leading to a series-record drop in new export business.
The Bank of England reported that mortgage approvals for house purchase dropped to 56,200, reaching the lowest level since March 2013. The annual growth of consumer credit dropped to 3.7% — the slowest since June 2013.
UK Prime Minister Boris Johnson stated that Britain has passed the peak of the coronavirus outbreak:
I can confirm that we are past the peak of this disease.
We are past the peak and we are on the downward slope.
And we have so many reasons to be hopeful for the long term.
But we can only defeat coronavirus by our collective discipline and working together.
— Boris Johnson #StayHomeSaveLives (@BorisJohnson) May 1, 2020
Despite the statement, the Prime Minister delayed the announcement of lockdown unwind measures until the next week. That was bad news for the sterling. Another factor weighing on the currency was the lack of progress in the Brexit negotiations as it seems that the United Kingdom and the European Union cannot find a compromise.
GBP/USD fell from 1.2589 to 1.2540 as of 11:11 GMT today. EUR/GBP rallied from 0.8696 to 0.8755. GBP/CAD advanced from 1.7551 to 1.7590, reaching the high of 1.7634 intraday.
If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.