The GBPEUR exchange rate was -0.08% lower on Monday as the pair awaits UK employment and European GDP data. Traders are still giving the euro some benefit of the doubt as the continent awaits its own GDP data for Q1. That could be a big driver for the week and the UK also sees the latest employment data amid talk of labour shortages in the services sector. That was always going to happen with displaced workers leaving larger cities in the lockdown.
GBPEUR is trading at 1.1590 at lunchtime on Monday.
UK facing a “labour shortage”
UK employers in the beaten-down services sector are predicted to be facing a staff shortage as the lockdown lifts, with workers being displaced by the government lockdowns.
The Chartered Institute of Personnel and Development (CIPD) and recruitment firm Adecco, have said that employers are planning to bring on new workers at the fastest rate in almost eight years, boosted by the economic reopening in the hospitality and retail sectors.
Tomorrow sees UK employment data and the HR group have predicted further declines in the numbers of European workers, with many moving back home to see out the lockdown insecurity.
The employment data from the UK tomorrow will still be masked by the lockdowns and the latest comments from the CIPD and Adecco show that headwinds still exist for the economy. The belief that a smooth transition back to “normal” will happen is about to be tested in the coming months and this week will be a big one for the pound to euro, with growth figures from the Eurozone for Q1. Traders have given Europe the benefit of the doubt in recent weeks but the Q1 data will be an acid test, to see if it can match the pace of the UK reopening.
June reopening still at risk
Fears have been rising that the recent Indian virus strain would derail the UK’s reopening and comments from Boris Johnson and the UK Health Secretary Matt Hancock have reinforced that. Hancock said that the “vast majority” of people carrying the virus in hotspots like Bolton and Blackburn haven’t received the vaccine, despite being offered it.
A recent study said that from 3,000 vaccinated healthcare workers in India, the AstraZeneca vaccine had seen only 85 with reported symptoms and only two required hospital treatment.
The UK has been moving towards its 21st of June reopening with indoor bars and restaurants returning, but scientists from SAGE have warned that the latest Indian outbreak could cancel the last move towards a full reopening in the UK.
The British currency has been boosted by strong GDP growth figures and will now look to gain further from the full reopening and much-needed support for the services sector. Sterling was strong last week after the UK elections and GDP growth boost, but this week will be key with UK employment and European GDP.