Forex: Pound, Euro to Extend Weekly Losses; Virus Impact Will Continue to Dominate

© Reuters.  © Reuters.

By Yasin Ebrahim – The pound and euro are set for a second-straight weekly decline against the dollar on Friday, as analysts’ warn of further pain despite expectations that U.K and Eurozone economic output could improve this month.  

fell 0.88% to $ 1.2118, a more than seven-week low, while was up 0.12% to $ 1.0817.

The impact of the coronavirus will likely continue to keep a lid on the pound and euro even as U.K. and eurozone purchasing managers’ index surveys – set to be released next week – will likely recover in May, UniCredit suggested.

“There are still fears of a second wave of Covid-19 infections after new cluster cases were reported in Wuhan, China, and after new infections have also emerged in South Korea and Germany,” the bank said.

Earlier this week, the U.K. reported GDP had declined 2% in the first quarter of the year, its quarterly biggest decline since 2008. The second reading of Eurozone GDP showed growth fell by a record 3.8% in the first quarter, with analysts warning of a deeper contraction in the second quarter.  

“As the lockdowns had a far larger impact in terms of depth and time in 2Q than 1Q and the reopening of economies will happen just gradually, the decline in GDP will be far larger in the second quarter,” ING said.

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