EURGBP Seeks a Low Despite UK employment Boost

The EURGBP exchange rate was trading 0.10% higher despite stronger than expected employment data from the UK. Like Wednesday, sterling rallied on the data but has since pulled back to give the euro the upper hand.

The EUR to GBP is trying to find a bottom at this level and tomorrow will see the release of the latest inflation rate for the Eurozone.

UK unemployment rate drops to 4.8%

The British pound was boosted by employment data on Thursday which showed that over a half a million more workers were in place than a year earlier. The unemployment rate also moved below the 5% figure to 4.8% as services sector hiring increased with the economic reopening.

Chancellor Rishi Sunak cheered the news, saying:

The chancellor, Sunak, said: “As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound.

We are bouncing back – the number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.”

A spokesperson for the ONS data collectors said:

“The labour market is continuing to recover, with the number of employees on payroll up again strongly in June. However, it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.”

The UK is set to see all virus restrictions lifted on Monday and that could further boost the hospitality sector.

Inflation data ahead for the Eurozone

Tomorrow will see the final data set for the week with the release of Eurozone inflation data for June. The market expects a dip to 0.9% from 1% but the US and UK figures were seen higher this week so a surprise is still possible.

Economic growth in the EU and the eurozone is expected to expand by 4.8% this year, according to the Summer 2021 Economic Forecast, presented by Euro Commissioner for Economy Paolo Gentiloni on Wednesday.

Major economies such as Germany, France, Italy and Spain are set to see GDP growth of 3.6 percent, 6 percent, 5 percent and 6.2 percent, respectively, in 2021. On the other side of the EUR v GBP equation, the British economy will be stronger. “We expect the economy to grow by 6.6 percent this year,” said the latest UK Economic Outlook report from KPMG.

It is the UK’s lead on growth that is propelling sterling towards its strongest levels for the year and Monday’s lifting of restrictions could also help. The only headwind for now is the surge in virus cases in the country, which was over 42,000 yesterday. In Europe there are still restrictions being seen in all countries with France employing strict measures on vaccinations and Malta only allowing vaccinated travellers.

The EURGBP exchange rate trades at 0.8540 and tomorrow’s eurozone inflation will determine the trend into next week.

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