The pound to euro exchange rate has seen post-Brexit pound strength fading after Prime Minister Boris Johnson pushed the country into yet another lockdown. Sterling saw little follow-through from Johnson’s EU exit deal and the country’s move into yet another government lockdown has seen the currency stumble.
German unemployment figures have shown another slump in jobs for Europe’s largest economy as the virus continues to affect world economies. The numbers were balanced by a rise in retail sales for the country.
The pound to euro rate has fallen from Monday’s open near 1.1200 to trade at 1.1050 after another 0.20% loss on Tuesday.
UK Plunged Back into a Third Full Lockdown
The Prime Minister’s announcement on Sunday saw the UK pushed into another full lockdown and Nicola Sturgeon has also done the same for Scotland. Businesses across the UK are calling for further support and a more coherent strategy for the next six months in order to avoid further closures and job losses.
The UK’s retail and hospitality sectors are likely to see the largest hit after Johnson forced all non-essential shops, restaurants, and bars to remain closed. The Prime Minister’s goal is now to implement a strategy for delivering 2 million coronavirus vaccinations per week to try and reverse the course of the virus.
The pound has seen little gains from the approval of the Brexit deal and the ongoing virus problems are putting a heavy weight on the British currency.
Germany Retail Sales Counter Employment Slump
German jobs numbers this morning showed a surprise loss of jobs for Europe’s largest economy. Analysts had expected to see gains of 10,000 jobs after losing almost 40,000 jobs last month. The latest numbers have shown another loss of 37,000 jobs. This is not too large for the size of the German population but it highlights that the trend is going in the wrong way and the unemployment rate has stayed stuck at 6.1%.
The employment figures were balanced out by higher-than-expected retail sales numbers for the country. The market expected to see a print of 3.9% but the actual number was 5.6% which has helped the euro to hold its gains against the pound this morning. The latest UK lockdowns will now feed into the upcoming economic numbers and the outlook for the GBP to EUR rate will be largely driven by the spread of the virus into Europe. This has not been severe as yet but it could lead to stricter measures if it does happen.
Support for the pound to euro pair ahead is at 1.1000 and the lows of December were around 1.0850-1.0900. The pound is likely to see further pressure this week as the latest bout of restrictions add to bearish bets on sterling. If you have an upcoming currency exchange and would like to discuss a plan of action, taking these factors into account, get in touch using the form below. I’ll be happy to respond personally.