EUR to GBP Rate Holds Support on Weak UK Employment
The EUR to GBP exchange rate was still holding the key support level of 0.8870 after the release of the latest employment figures from Britain. The bounce hasn’t bene strong in the euro and it’s possible that sterling can advance further in coming sessions with a break below that level.
A move lower in EURGBP could see the pair testing support levels around the 0.8700 level.
German Business Data Sours and UK Employment Sluggish
Data this week has highlighted the gloomy mood in the UK and European economies with business climate sentiment souring in Germany and Britain’s employment situation still weak.
The German IFO business climate index came in at 90.1 this month after a rise to 91.8 expected. This underlines the pessimism in the sector, but it is still a lot higher than the lows of 74 in April. The number just highlights the ongoing uncertainty as governments change the rules on a regular basis.
The UK employment figures saw the country’s unemployment rate rising to 5% for the first time since 2016. The rise is disappointing, but the figures showed a smaller loss in jobs than expected for the period. Analysts had expected a loss of 100k jobs, but the number was -88k.
Business support groups still used the numbers as a means to pressure government on extending the furlough scheme. The jobs market is being propped up by this scheme and the state of the jobs market would be a lot worse if it was removed.
Germany sees further data ahead with the release of consumer confidence tomorrow and inflation on Thursday. The consumer number is likely to be flat as lockdowns persist and this will not affect the euro to pound outlook. The inflation number on Thursday may be more important as it is expected to show the country jumping out of deflationary territory after two consecutive prints at -0.3%.
If Germany shows a stronger number, then it will take some of the pressure off the European Central Bank to act against euro strength.
European Stocks Slide on Lockdown Fears
European stocks were lower on Monday as traders feared a fresh set of coronavirus lockdowns. Holland also saw another night of unrest over the latest curfews imposed in the country.
Europe was also struggling with another blow to its vaccination efforts, after British-Swedish drug maker AstraZeneca warned that it won’t be able to meet the targets promised to the EU. This follows delays by the US drug maker Pfizer and the issue could derail the European economic recovery. Britain has already vaccinated up to 6 million people, while Europe has barely gotten started.
We can expect this factor to play a big part in the EUR to GBP exchange rate in the coming weeks, for more information on how this is likely to impact your currency exchange in the short term feel free to get in touch using the form below.
The post EUR to GBP Rate Holds Support on Weak UK Employment appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/01/eur-to-gbp-rate-holds-support-on-weak-uk-employment/
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