The GBPEUR exchange rate was -0.11% lower on Tuesday morning, despite the UK seeing positive jobs numbers. The country saw a higher-than-expected figure for new jobs, with vacancies at their highest for a year. European GDP for Q1 came in at expectations and that has helped to support the pound sterling.
GBPEUR is trading at 1.1620 after the morning session as the Euro tries to defend the 1.16 level.
UK Jobs Improve
Europe’s GDP for Q1 was -0.6% and that was enough to support the single currency with the number being at expectations.
The European Commission had raised its GDP growth outlook to 4.3% from 3.8% previously and said all European economies would be at pre-virus levels at the end of 2022. The figures are not close to the UK, which is expected to see 7.2% this year, with the economy at pre-virus GDP levels a year earlier and it’s maybe surprising that the pound is not higher.
The figures have helped to soothe euro bearishness on Tuesday after the UK released employment numbers. Tomorrow will see the release of inflation for the EU and UK, with the latter having more risk of an upside surprise. The UK has been moving forward to a full reopening and should see prices move higher.
The pound is seeing bearish bets on suggestions that the tiered lockdown system could return as scientists keep talking up the rise of an Indian virus variant. This is threatening to derail the June 21st reopening in the country. The government extended its emergency powers into October, while the furlough is continuing until September, so the risk of further lockdowns still exists.
UK Jobs See Further Improvement
UK job vacancies have seen their highest level for a year as the reopening has seen a surge in hiring in the services sector.
During the February-to-April period the country saw a total of 657,000 vacancies, which was higher by almost 50,000 on the previous quarter. The unemployment rate dipped to 4.8% during the three months to March, which is down from 4.9% in February, according to the Office for National Statistics.
Darren Morgan, a director at the ONS said that the number of employees on payrolls “rose strongly in April” with the UK moving towards a full reopening.
“There remains, however, three-quarters of a million people fewer on the payroll compared with the pre-pandemic peak,” he added.
The UK Chancellor Rishi Sunak said the figures showed that the government had been successful in protecting jobs.
“While sadly not every job can be saved, nearly two million fewer people are now expected to be out of work than initially expected – showing our Plan for Jobs is working,” Sunak said.
Analysts are still expecting a jump in the unemployment rate when the UK sees the furlough removed in September. There are still more than four million workers still retained on the furlough scheme, who count as employed.
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