Unemployment in the UK, EU 540+ bln fund and hopes for the best

Yesterday turned out to be quite rich in a variety of macroeconomic statistics. The UK has reported a record jump in the number of jobless claims. The number of people applying for unemployment rose to 2.1 million in April from 1.2 million a month earlier, increasing by 70% and reaching the biggest change from the previous month since the start of registration in 1971.

So our recommendations to sell the pound continue to be relevant, especially in light of the fact that on Wednesday, Thursday, and Friday we are waiting for new data on the state of the UK economy, which will almost certainly be weak.

Unlike the pound, the euro has much more reasons for growth. This is primarily a statement by Merkel and Macron that Germany and France will support the creation of a fund of $ 546 billion to help Member States most affected by the outbreak of coronavirus. In addition, the ZEW Expectation Index yesterday showed an unexpected increase to 51 (the highest value over the past 5 years).
However, the ZEW current situation index reached -93.5 (!), which somewhat spoiled the mood for buyers of the euro and the DAX index.

In general, despite the generally positive fundamental background, the growth potential of the euro against the dollar looks rather limited (we are talking about the resistance near 1.10). But against the pound, growth prospects of euro now cause even less doubt. In this light, we recall our recommendation to buy EURGBP, which we published when the pair was below 0.87. And although the cross has already grown by 250 points since then, its growth potential has not yet been fully exhausted.

The optimism about the Moderna vaccine has faded somewhat, since the obvious became clear - it will take months to go on the shelves, so here and now this does not solve the pandemic problem as well as economic problems.

Other data confirm that the world economy is now experiencing one of the worst moments in modern history: car sales in the EU fell by 76%, the start of construction drop by 14.1%, in the US the situation is even worse - the start of construction literally collapsed by 30.2% . So our recommendations to sell in the stock markets are still relevant.