The GBPEUR exchange rate is up 0.20% on Thursday with the latest German inflation data due ahead of tomorrow’s GDP growth rates from the Eurozone. The numbers will help traders to see if Europe can achieve the growth expectations set recently.
The GBP v EUR is trading near 1.1520 in early trading with German unemployment coming in higher, but no enough to alter the overall dynamic.
German employment subdued
German employment was flat this morning with a growth of 9k jobs in Europe’s largest economy, which was better than the -10k expected, but the numbers did nothing to change the unemployment rate, which is stuck at 6%.
The numbers highlight the stagnation in the German hiring sector after a brush with further lockdowns. The manufacturing sector has learned to live with the shutdowns, but tourism and retail has struggled. There has been some glints of hope that Europe is moving out of this problem with France loosening restrictions this week.
This morning will also see the release of German inflation numbers and a reading of 1.9% is expected versus last month’s 1.7%. This would show that the prices in the economy are heating up without the country being open and that would lead to further increases later. The European Central Bank would likely step in at the initial stages to cool anu bond rises, but it could be a global issue as all of the central banks have to avert course. Tomorrow will see core inflation released for the Eurozone, which will give another indicator of this.
The morning will also see GDP estimates for the German, Italian, and Eurozone and this will be the crucial number for the GBP to EUR exchange rate. The market will want to see if the Eurozone can meet the expectations of the likes of the IMF when it reopens its economy, with the UK already powering ahead from its own lockdowns.
French reopening, political tension
Emmanuel Macron will outline new guidelines tomorrow on how restrictions in France will continue to be relaxed.
The government will also remove its state of health emergency, which gives politicians executive powers to push through strict measures. However, this is said to be done with a “transition phase” to October, which seems to match Boris Johnson’s own October extension in the UK.
The news may not please the recent demonstrations and military tension in the country after a group of military soldiers slated the government in an open letter over their handling of the virus measures.
The story took another twist with Macron saying that her would punish the soldiers over their comments and it could spark further tensions in the country, which has seen a lot of protest over labour rights and pensions over the last years.
GBPEUR will look to hold onto the 1.15 level here and the German inflation release today will now be the driver, with the GDP being the key data point tomorrow.