The GBPEUR exchange rate was -0.10% lower on Thursday as it repeated the price action of the previous day. A sharp rally on stronger economic data was met with selling and the price retreated. This time it was the turn of employment data with the UK seeing the unemployment rate drop to 4.8%.
The GBP to EUR has given up the day’s gains but is looking for support at the stubborn 1.17 level. That could be the springboard for further gains to the yearly highs at 1.18.
Employment figures boost the British Pound
Chancellor Rishi Sunak has said Britain’s economy was bouncing back after the latest ONS figures showed the number of workers on payrolls surging in June by 356,000.
Signs of an improving labour market was also seen with an increase in job vacancies to 862,000 after a rise of 241,000 between April and June. With many firms struggling to find workers in some sectors, jobs vacancies are 10% higher than in early 2020.
Economic statistics director at the ONS, Darren Morgan, said: “The labour market is continuing to recover, with the number of employees on payroll up again strongly in June. However it is still over 200,000 down on pre-pandemic levels, while a large number of workers remain on furlough.”
The Chancellor added: “As we approach the final stages of reopening the economy, I look forward to seeing more people back at work and the economy continuing to rebound. We are bouncing back – the number of employees on payrolls is at its highest level since last April and the number of people on furlough halved in the three months to May.”
The unemployment rate moved below the 5% level with a reading of 4.8% in the latest data set and that was another boost for sterling.
Europe hit storms and flooding
At least 42 people have died in Germany and dozens more were missing on Thursday as record rainfall and flooding across western Europe swept through towns and villages.
Belgium and the Netherlands was also hit by severe flooding in another blow to the economic recovery.
The pound was also hit by the fact that 1,200 scientists had written a letter to a medical journal urging a government rethink of the July 19th reopening.
The final economic data point for the GBP v EUR this week will be the release of June core inflation for the Eurozone tomorrow. Analysts are expecting a drop to 0.9% from 1% but the UK and US numbers were higher this week and a surprise is possible.
The European Central Bank will not have to worry too much as the later economic reopening has them behind the curve of the other central banks.
The GBP versus the EUR rate will hinge on this 1.17 level as traders try to get the pair back to the yearly highs as the UK gets set to see restrictions almost fully removed on Monday.