The GB PEUR exchange rate was jumped 0.53% on Thursday after the Q2 GDP figure was revised higher. The annualised growth for the quarter had been set at 22.2% but came in higher at 23.6%. Germany’s unemployment rate also showed a modest retreat for the month of September.
The GBP to EUR trades at 1.1630 and the pair awaits European core inflation today for September, while inflation missed forecasts.
UK second-quarter economic rebound stronger than first thought
The bounce-back in the UK economy was faster than first forecast in the second quarter as spending surged after lockdowns were lifted, according to official figures.
The ONS reported that GDP was 3.3% below where it was in the final quarter of 2019 before the pandemic struck, against the 4.4% previously estimated.
The largest driver of the upward GDP revision was in household spending, where it added four percentage points of the 5.5% increase as restrictions were eased to allow outdoor dining in April, with further restrictions lifted in May.
That period saw pent-up demand and high levels of savings and Britons ramped up their spending. However, the pound sterling has struggled recently as the latest data hints of an slowdown in the growth.
Figures earlier the month showed economic growth eased to just 0.1% in July, down from 1.4% in June, and there are fears that supply chain woes and the current energy issues will further hamper the British economy.
Martin Beck, senior economic adviser to the EY Item Club, said: “Headwinds to growth from supply disruption, the negative effects on household spending power, sentiment from rising inflation and energy prices mean the recovery is looking more fragile.”
German unemployment falls again, inflation at 30-yr high
German’s unemployment fell again in September, official figures showed on Thursday, suggesting that the recent supply chain problems affecting industrial firms are not curbing hiring in Europe’s biggest economy.
The Labour Office reported the number of people out of work had fallen by 30,000 to 2.508 million. A Reuters poll had forecast a more modest fall of 33,000.
The jobless rate in the country remains remained unchanged at 5.5%.
“The labour market continues with its positive development,” said Daniel Terzenbach of the Federal Labour Agency. “Unemployment and underemployment are both falling significantly.”
In other data, German consumer prices were seen to be rising at the fastest pace in nearly three decades, fueled by supply chain bottlenecks and a series of temporary pressures affecting the economy’s pandemic recovery.
Inflation jumped to 4.1% in September, according to data from the Federal Statistics Office. Energy alone was 14% more expensive than the same period last year, when government lockdowns curbed demand and prices.
Europe’s largest economies are all suffering from higher prices following the end of lockdowns at the start of summer. France, Italy and Spain were among those with inflation rates higher than the 2% target set by the European Central Bank.