UK data releases have started to shine a light on the economic costs of the lockdowns. Compounding the economic woes for the UK is uncertainty regarding Brexit, per Rabobank.
“A quarter of businesses have stopped trading and the government is supporting 4 million jobs through its furlough programme while UK consumer confidence has plunged and the retail sales have contracted by a record amount (down 5.1% m/m in March). PMI data recorded the fastest decline in business activity on record.”
“Brexit negotiations recommenced in April but senior sources on both sides are reported as suggesting that a deal is not likely by June. This underpins the risk that the UK could leave the EU without a trade deal at the end of this year. This factor and the UK’s large current account deficit make GBP vulnerable.”
“We see scope for a push higher towards EUR/GBP 0.88 on a 1 to 3-month view.”