Pound to Euro Exchange Rates Still Looking for Direction Ahead of UK Unemployment Figures

GBP EUR Higher Ahead of PMI Business Activity

The rollercoaster in the pound’s value has calmed over the last two weeks as the pound has retraced a large proportion of its losses versus the euro but hit heavy resistance at 1.15. This is consistent with the pound’s performance in the run up to Brexit where 1.15 was a significant magnet for the pound.

Having gained over 9 cents from the recent 1.0525 low on 19th March, the pound has significantly recovered in value as the euro feels the pressure from a lack of clear action on financial aid and shared debt through so-called ‘coronabonds’ as discussed in more detail in yesterday’s blog post.

UK Unemployment Began to Rise Before Coronavirus Hit

Figures from the Office of National Statistics (ONS) showed this morning that unemployment in the UK was beginning to rise before coronavirus hit the UK. With the latest stats available for February this year showing unemployment had edged to 4% for the month, a 0.1% increase. The employment market in the UK has been incredibly robust over the past 12 months as we saw record highs in employment numbers.

The employment market is expected to suffer a deep blow from the onset of Covid-19 from March this year and predictions of a 27 year high at an unemployment rate of 10pc being predicted by the Office for Budget Responsibility (OBR) will do little to support the Pound higher at this point.

German ZEW Report Eagerly Awaited

Market focus this morning was on the release the German ZEW Survey. As Europe remains impacted by Covid-19 lock-downs and expectations of sharp declines in GDP the importance of economic sentiment in Germany, Europe’s powerhouse is significant.

Last month’s ZEW Economic Sentiment release plunged by 58.2 points to -49.5 in March 2020, the lowest level since December 2011. It was also the largest drop since the survey was started in December 1991, as coronavirus worries rattle the global markets.

This month’s release expected at -26.4 proves that less bad does not necessarily mean good and there is still heavy pressure on the single currency as a result. Data is still awaited at the time of writing.

German GDP is expected to contract in the first half of the year, and expectations for 2020 as a whole point to a decline as a result of the Covid-19 pandemic. This could weigh heavily on the value of the euro.

For more information on factors influencing GBPEUR exchange rates for an upcoming currency transfer, feel free to contact myself, Lauren Buckner, using the form below.