GBPEUR Reverses After German Employment Data

GBP EUR Gains on Goldman Sachs Rate Outlook

The GBPEUR exchange rate was 0.17% lower at midday after the release of German employment data. The number showed a stronger labour data than expected as the country moves out of lockdown.

GBPEUR is trading at 1.1600 after earlier pushing higher and looking to test the 1.1650 level.

German Labour Sees Improvement

German unemployment dropped 84,000 in May, meaning a lower number of jobseekers at 2.68 million.

The unemployment rate remained unchanged at 6.0%, but this the lowest unemployment number since April last year and also the best performance for German labour in May since 2012.

There are still headwinds for the economy as much of the employment, 2.6 million, is in short-time work. ING said of the situation:

“Interestingly and according to media reports, short-term work schemes are no longer being used to exclusively tackle the fallout from the crisis but also as a result of increasing supply chain disruption, particularly in the German automotive industry.”

For the German employment market, the worst of the crisis seems to be over. Employment expectations in the important manufacturing industry have started to improve, while since March, the services sector has started to see an increase in hiring. The recent business sentiment data could add to that trend for hiring.

However, despite the improved outlook, the German jobs market is still facing two risks in rising bankruptcies and an end to government support.

The employment market situation in Germany is similar to the UK but the euro economy has lagged and traders are giving the euro some support as its largest economy improves.

Government Advisers Warn of UK Virus Cases

UK government advisers on health seem determined to ramp up the fear over the so-called Indian virus variant, despite earlier assertions that the vaccine would protect citizens from it.

Professor Adam Finn, of the Joint Committee on Vaccination and Immunisation said there are risks from the current spread of cases.

“There’s vulnerability across the country. The idea that somehow the job is done is wrong. We’ve still got a lot of people out there who’ve neither had this virus … nor yet been immunised, and that’s why we’re in a vulnerable position right now.”

The scientific advice seems to be detached from the reality that the vulnerable age groups were in the 70-80 year old bracket and that the majority of those have now been vaccinated, while Boris Johnson assured the country that the vaccine would protect from the latest virus variant.

In contrast, Robert Dingwall, professor of sociology at Nottingham Trent University, has urged the government to press ahead with the June 21 easing.

“I personally don’t see any case for delay … from a societal point of view, I think it’s really important that we go ahead on June 21 and I’ve not really seen anything in the data that would lead me to doubt that as a proposition on the evidence to date,” he said.

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