The pound to euro rate was trading unchanged on Tuesday after unemployment numbers were better than expected, but still showed gloomy conditions. The British economy still lost 144k jobs, but analysts had forecast a drop of 250k. Once again, the numbers are taking a back seat to the virus as London is about to see a strict lockdown and a new strain was being reported in Southern England.
The extended Brexit talks are still ongoing but there are no new updates to the recent stalemate. The GBPEUR rate was trading at 1.0975 on Tuesday but we could move below 1.0800 on the week if Brexit talks sour.
Unemployment Figures at a Record as Virus is Still a Threat
Unemployment figures for the U.K. showed a 144k drop after analysts had forecast a larger 250k loss of jobs. The improvement was undermined by the bigger picture as labour market data showed 370k redundancies for the August to October period, which was higher than any three-month period during the 2008-09 recession.
Figures released by the Office of National Statistics (ONS) also showed that the UK unemployment rate had risen to 4.9%, up from 4.8% a month earlier. Around 1.69 million people were still unemployed in the three-month period, which was 411k higher than a year ago.
London Set for Tier 3 Lockdown as Officials Tout New Virus Strain
Heaping more weight on the GBP to EUR exchange rate is the news that London is about to move into a Tier 3 lockdown after an “exponential rise in cases”. The announcement from Matt Hancock will see around 11 million people move into tier three, with 60% of England’s population coming under the toughest rules from Wednesday. Hancock also noted that health officials had found a new strain of the Coronavirus in Southern England. Around 60 local authorities had reported over 1,000 cases, “and the numbers are growing rapidly,” Hancock said.
The developments puts a dampener on any green shoots of recovery seen in the economy and the only thing helping the pound is that Europe is in a similar environment, with Germany seeing an extension of strict rules into January 10th.
The pound euro will still hinge on Brexit this week as talks were extended, but negotiations will have to wrap up this week as the Christmas period arrives and any agreement would have to pass through the EU27 countries and also both Parliaments.
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