The GBPEUR exchange rate is 0.20% lower on Tuesday after the latest UK employment was slightly better than expected. The country still saw a loss of -88k jobs, but this wasn’t as bad as analysts had predicted.
GBPEUR was trading at 1.1240 level after a small Monday gain.
UK Employment Number Beats Gloomy Prediction
The British economy saw a loss of -88,000 jobs, which was better than the -100,000 that analyst had expected. There wasn’t a lot of time for cheer as the ONS release saw the unemployment rate moving higher to 5%, which is the highest reading since 2016.
There are some bright spots in the data, but it seems that the true extent of the economic damage is being covered up by the ongoing furlough scheme.
The Office for National Statistics head of data remarked: ‘The latest monthly tax figures show that there were over 800,000 fewer employees on payroll in December than last February. Business groups were anticipating more gloom and were quick to pounce on the latest release and reiterate their calls for a further extension to furlough.
The UK economy has been hit hard by the effects of the government lockdowns on its services sector. Job sectors such as retail and hospitality have been important to the economy, which is services-led. The worry for the British pound is the damage that is left behind when furlough is lifted. If the furlough continues then this will add to the government’s debt. Most developed countries are seeing the same issues and sterling may fare better than the European Union if it can continue its fast pace on vaccines and open the economy sooner.
Yesterday’s data from Germany saw a dip in business owner sentiment as the lockdowns continue to weigh on the mood of entrepreneurs. Tomorrow sees consumer confidence data from Europe’s largest economy, followed by inflation on Thursday.
Virus Strain Spreads Further in Europe
The latest virus strain that was detected in south-east England at the end of the year is now showing up globally with cases in the USA and New Zealand. This leads to the potential for further travel bans on the UK and Europe is considering that at the moment. Governments are now trying to vaccinate the vulnerable age groups to get their economies back open.
The UK is leading the race against Europe to get the population vaccinated with the country administering up to 6 million of its population already. Three-quarters of Britain’s over-80s have now received a vaccine shot.
The GBP to EUR exchange rate will be driven by the coronavirus issues in the near-term. Sentiment data is not moving the market and the central banks have had their meetings, so even inflation is not having too much of an effect. The next key numbers will be GDP updates, but the virus timeline will run the markets in the near-term.
Get in touch using the form below for further information on the factors impacting GBPEUR currency exchanges.