Eh! Euro, Pound Has Falled Right? Why Rise Again?

 The euro recorded a slight increase from the two-month low against the US dollar after being shown with mixed economic data readings in the European Zone.

The euro trade initially showed a decline after seeing a significant decline in the services sector before rebounding due to the growth shown in the manufacturing sector in the European Zone in September.

However, the economic recovery in the European Zone is seen to have stalled as the increase in Covid-19 cases has led to a decline in a service activity in the region.

While the pound has also begun to show up following the statement by European Union (EU) Brexit Chief Consultant Michel Barnier who remains determined to reach an agreement with the UK.

Nevertheless, the pound sterling continued to trade weaker against the US dollar and the euro due to concerns over the risk of a second wave of coronavirus and Brexit uncertainty.

The introduction of the latest sanctions in the UK by Prime Minister Boris Johnson is expected to further weaken the country's economy, which is struggling to recover after suffering the biggest contraction in 40 years.

The latest data shows that manufacturing and service activities respectively showed a decline in September. This reading may not reflect the full impact of the second wave of Covid-19 given the restriction measures just announced on Tuesday.

UK economic activity may be more severe if coronavirus transmission fails to be curbed and sanctions continue to be implemented in the country which will certainly put pressure on the employment and business sectors.