The GBPEUR exchange rate was 0.10% higher on Tuesday after a better-than-expected employment release. The UK saw 84,000 jobs added, compared to the 50,000 expected. Clouds still loom over the jobs data and traders are not getting overly excited by the data.
The GBP to EUR trades at 1.1640 and European Q1 GDP numbers at 10am will be key for the day.
Jobs number better but clouds still hover
The UK saw a rare positive jobs number this morning as the economy comes back online and services companies start to re-hire.
Despite this, there are still some issues in the UK jobs market with the furlough scheme still masking many of the underlying issues. A recent study by PriceWaterhouse Coopers said that a quarter of UK workplaces are expecting to reduce headcount next year. The poll of 400 British business leaders also found that 55% of businesses expect to be carrying additional debt on their balance sheets next year, as earnings lag spending.
A spokesperson for the report said:
“As with any ecosystem there are those who rely on a symbiotic relationship with businesses. Landlords, suppliers and lenders among other stakeholders will be critical as long term behavioural changes and online consumerism shape business strategy and real estate footprint”.
The UK has seen strong GDP growth figures and will now look to power ahead with the economy reopening and a boost to the hard-hit services sector.
Another study released by The Chartered Institute of Personnel and Development (CIPD) and recruitment firm Adecco said that employers plan to take on new workers at the fastest pace in almost eight years, boosted by the reopening of the hospitality and retail sectors.
The HR group also said there had been a sharp decline in the number of European workers, which had fuelled the risk of labour shortages in the future.
European GDP will determine the GBP to EUR rate
The European economy will see the release of GDP numbers this morning with the market expecting a loss of -0.6% compared to -0.7% in the three months to December. The year-on-year growth figure will see a reduced -1.8% loss from -4.9% as the continent seeks to recover from the lockdowns.
The latest growth figures will be pivotal for the pound versus euro rate due to the fact that the UK has been forecast to see 7.2% growth in 2021 and the single currency needs the European recovery to kick into gear and get nearer to that level.
The European economy is going to lag the UK for growth, but today’s Q1 figures will give traders a better estimate of how well they are pricing the recovery expectations in the continent after the continued lockdowns and slower pace of reopening. Tomorrow is another big day for data with the UK and Europe both seeing inflation released.
The GBPEUR has the next upside target at 1.18, which marked the 2021 high, but the pair also has support at 1.15 if the euro sees strength.