EUR GBP Sees Break Lower from 0.8400 Support

The EURGBP exchange rate was looking for support at the 0.8400 level yesterday, but it got a significant break lower and is now pointing to further lows. German unemployment figures were improved, but more companies said they may put workers onto the furlough scheme due to a downturn from government restrictions.

The EUR to GBP rate was trading at 0.83610 and will look to test the 2020 lows near 0.8300 next.

Germany sees labour market improvement in December

German unemployment fell unexpectedly in December, according to data on Tuesday, in a further sign that the labour market in Europe’s largest economy was resilient in spite of further virus restrictions.

The Labour Office said that the number of people out of work fell by 23k in seasonally adjusted figures to 2.4 million, with a Reuters poll expecting a smaller drop of 15k.

“The labor market developed well at the end of the year. The recovery of the previous months continued,” Labour Office head Detlef Scheele said.

The jobless rate also dropped to 5.2%, the lowest since March 2020, which was the time of the first coronavirus lockdown.

Scheele noted that a jump in virus cases and renewed restrictions added further uncertainties. This was highlighted by the fact that more companies said in December they could soon put more workers on furlough again.

In October, the last month where reliable data was available, the number of employees on reduced working hours, also known as Kurzarbeit, fell to 710k. That was sharply lower than the peak of 6 million reached in April 2020.

The German government has enough funds for another phase of the Kurzarbeit scheme, the Federal Employment Agency revealed last week.

“We therefore have to redeploy staff again to cope with the volume, but we hope that this will be over by the end of March,” Scheele said.

Up to 15% of Omicron cases are reinfections, according to scientist

Imperial College epidemiologist Neil Ferguson was ‘cautiously optimistic’ and said that 15% of new variant cases were reinfections.

Matthew Taylor, chief executive of the NHS Confederation, said he feared ministers were engaged in a “politicised attempt” to play down the seriousness of the virus variant.

“We should feel some hope and confidence about the medium term, that we hope we will gradually become more able to live with Covid as the prime minister has said, that when Omicron has gone through us that we make it to that stage and the NHS will recover.”

Meanwhile, Prof Sir Andrew Pollard, chairman of the JCVI, said that further booster jabs should not be offered to everyone until there is more evidence. “We can’t vaccinate the planet every four to six months. It’s not sustainable or affordable,” he said.

Boris Johnson will meet with senior ministers again today to discuss the latest data, but said earlier in the week that there is nothing in the data to warrant further restrictions. With no economic data ahead for the pound sterling, the currency is heading for the 2020 highs versus the euro.

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