The GBPEUR exchange rate is 0.20% higher on the day after data releases boosted the pound and weakened the euro. UK GDP revisions for the fourth quarter were better than expected, while in Europe, inflation was soft, and Germany saw an increase in jobs losses.
GBPEUR is trading at 1.1745 as the pair seeks to get above the Monday high of 1.1755, which was a new peak for the year.
UK Economy Aims to Shrug off Worst Decline in 300 Years
Final fourth quarter revisions from the Office for National Statistics (ONS) said gross domestic product was even lower than forecast during the April and June lockdowns last year, with a drop of 19.5% against 19%.
Despite this, a host of revisions saw the economy rebounding by almost 17% in the third quarter, which was higher than the 16.1% previously forecast. The fourth quarter saw a 1.3% improvement on the expected 1% estimate.
A spokesperson for the ONS summed up the muted response in the pound, saying:
“…these new estimates paint the same overall picture as before, with historically large falls in GDP in the spring, followed by a recovery in the summer and autumn.”
The UK has already seen some promising numbers for the start of 2021, while the ONS also said that over 50% of the country should have immunity to the coronavirus after the rollout of vaccines. This should see the country outperform many others in the end of the second quarter and most of the third quarter. Sterling traders have been expecting this and the smaller revisions have added a little steam to the uptrend.
Germany Sees Jobs Trouble
Germany saw disappointing jobs numbers with a loss of -8k jobs, compared to expectations for a -3k loss. The unemployment rate stayed stuck at 6% for Europe’s largest economy.
The latest numbers will add to recent gloom seen in German industrials, with Volkswagen set to slash up to 5,00 jobs. The cracks are starting to appear in the bailout and furlough illusion for many countries. VW is looking to reduce costs after the lockdowns pushed down output at German car manufacturers. Volkswagen, based in Wolfsburg, are seeking to cut costs by 5% through to 2023 as industrial firms feel the pinch of reduced demand.
The Eurozone saw core inflation drop from the 1.1% expectation to 0.9% this morning. Higher fuel costs were not enough to compensate for the deflation of lockdowns and the number will take the heat off the ECB after recent spikes in the bond market. The UK saw similar numbers recently due to retailers cutting costs and the real acid test will be when the economies re-open and consumers want to get out and spend their lockdown savings.
The GBPEUR still has the 1.20 highs from 2020 in its sights but it still has some way to go on the current speed of the uptrend. That could change if Boris Johnson speeds up his roadmap, although that is maybe wishful thinking.
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