The GBPEUR exchange rate closed back above the 1.16 level after a strong Monday and the move gives hope that the recent selling was temporary. Sterling bulls will now look for a jobs boost from today’s employment numbers for March and that will determine the day’s path.
The GBP v EUR is trading at 1.1605 ahead of the data and tomorrow will also see inflation released for the UK.
ING hopeful for the jobs recovery
The British economy will release the latest jobs number for the country with the market expecting a loss of -150k jobs. These are figures for earlier in the year and will not factor in the reopening, where services PMIs hinted at hiring ahead of the last week’s move to reopen pubs and retail establishments.
The numbers may not be too special, but traders will give the benefit of the doubt for the past couple of months and ING bank are hopeful of a recovery in employment. In a report on the country’s outlook they said:
“Jobs data due tomorrow is likely to show the unemployment rate at roughly 5%, up from its pre-pandemic low of 3.8%”
The bank sees the recovery being faster than the financial crisis of ten years ago but still sees the market taking time to recovery fully. This will depend on the virus situation and the furlough scheme, but the research highlighted that consumer services usually leads the sectors out of jobs market turbulence and this could be helped by the high level of savings in the hands of UK consumers.
Virus stability would also help the jobs recovery as ONS analysis saw a 7.4% fall in EU nationals on the UK payroll. Much of that will be related to the displacement of foreign workers from expensive areas such as London when workplaces were shut down.
UK adds India to its red list
The UK government added India to its red list on Monday after a surge of virus cases in the country. Prime Minister Boris Johnson also called off a planned trade trip to New Delhi.
Health Secretary Matt Hancock confirmed that India was being added to the UK’s restricted list, with all arrivals from India being banned, except for UK/Irish nationals, who will have to quarantine.
A joint statement also said: “In the light of the current coronavirus situation, Prime Minister Boris Johnson will not be able to travel to India next week.
Instead, Prime Ministers Modi and Johnson will speak later this month to agree and launch their ambitious plans for the future partnership between the UK and India.”
The UK will be able to back to making trade relationships when the virus subsides and that could boost sterling in the future.
The GBPEUR saw highs this month at 1.18 but leveraged sellers bailed out saw the pair go below 1.14. The jobs number today and tomorrow’s inflation numbers will determine where the pair heads next.