GBP EUR Edges Higher with UK Employment Figures Due

GBP EUR Slumps as British PMI Data Disappoints

The GBP EUR exchange rate was 0.20% higher on Monday with UK employment figures due out on Tuesday. The market is expecting a positive return from the jobs market, but traders are already looking ahead to damage from the latest restrictions. Pressure has mounted on Boris Johnson to resign after the Christmas party drama.

The GBP EUR was trading at 1.1745 ahead of the latest economic data.

British employment figures due but restrictions loom

The UK will see the latest employment figures today with analysts expecting 228k jobs added after 247k in the previous month.

The economy was seen slowing in the GDP report last week and the country continues to suffer with some labor market troubles. Even a good number for unemployment today will be met with caution due to the latest restrictions from the government.

The Plan B rules are set to be voted on in Parliament today with Labour’s support meaning that they will likely pass. There was even talk of a Plan C and that will weigh on the pound sterling.

British Airways, easyJet and Ryanair were seen leading the charge against the Government’s “haphazard” Covid restrictions.

In an open letter, the companies said the Government restrictions were “haphazard” and “disproportionate”. Under the new rules, travellers over the age of 12 will need to show proof of a negative virus test before travelling to the UK, even if fully vaccinated.

The companies said travel has been “singled out” adding that: “Pre-departure and upon-arrival testing clearly add very little value to our Covid protection, but unnecessarily disrupt Christmas for families as well as businesses while severely damaging the UK travel industry.”

The market is looking ahead to interest rate meetings on Thursday with an eye on the potential restrictions going forward.

Bank of England warned over house price bubble

The Bank of England is reviewing lending criteria put in place after the financial crisis, but potential tweaks could see prices soar and create a new housing bubble.

House prices have surged this year due to many factors such as record low interest rates and the stamp duty holiday. There has been suggestion that prices will slow next year but a relaxation of lending rules could work to push them higher.

Gemma Harle of Quilter Financial Planning said: “Now the stamp duty holiday has been rescinded we are starting to see the volume of transactions reduce and are likely to also see house prices deflate slowly as a result.

“However, changing the affordability rules could be at the cost of perpetuating unsustainable house price growth leading to a housing bubble which eventually pops like we saw in the previous financial crash.”

“Ultimately, this could lead to many people being left with negative equity, which can be a disastrous position to be in particularly early on in life.”

Sarah Coles, Personal Finance Analyst at Hargeaves Lansdown, also warned creating a “boom on top of a boom” could risk creating a bubble in the housing market.

Pound Sterling Forecast – Powered by Lumon