07.05.2020 Eur/Gbp Daily Analysis

07.05.2020 Eur/Gbp Daily Analysis

Eur/Gbp is trading at 0.8719, it fell down with 0.0025 mainly because the pound is getting stronger against the euro since Bank of England left rates unchanged at 0.10% during its meeting. According to A.Bailey, the economy is expected to recover faster than following the GFC, while effects on the demand are seen lingering for around a year once the lockdown is lifted. Bailey went on to say that the central bank also expects the economy to contract by around 14% this year, reiterating at the same time its readiness to act in case of need. However, the risk associated with hard Brexit leaves GBP vulnerable in the coming months as it gives pressure on both the pound and euro. As of the moment, negotiations have started this year but engagement levels are low and both sides are still very far apart on a number of areas. The EU said no extension would be possible unless it is agreed by the end of June and right now the next round of talks is scheduled to begin May 11. In addition, today ECB President Lagarde is going to speak and this is going to affect the Eur/Gbp pair because she has an influence on the euro and also Band of England Gov Bailey is also going to speak in response to the second wave of infection and since he has more influence on the pound, there is going to be a change in the Eur/Gbp pair today.  More so, today the BoE Monetary Policy Report which is released quarterly, MPC Official Bank Rate Votes which is released monthly and Monetary Policy Summary which is also released monthly is going to come out today and if there is more hawkish than expected then it will be good for the pound. Official Bank Rate which measures the interest rate at which the BoE lends to financial institutions overnight is also going to be released today and if actual is greater than forecast it will be good for the pound.