GBP EUR Consolidates Ahead of Key Economic Data

GBP EUR Holds Key Support Before BoE Meeting

The GBP EUR exchange rate was steady on Monday as expected, with traders waiting for data being released today. The currency pair was lower by -0.07% to start the week but the day ahead is important to see if UK employment or European and German ZEW survey figures can determine the path of the pair near the resistance at 1.2000.

The GBP to EUR was trading at 1.1970 and will look to the data for direction with inflation coming later in the week.

UK employment could boost the pound sterling

The UK economy will see the release of the latest employment figures and there is a potential for a boost to sterling as these figures for October will precede the late-November Omicron variant spread.

Forecasts are looking for a 125k improvement in jobs, compared to 149k in the month previous, while the unemployment rate is expected to stay at 4.2%.

ZEW sentiment surveys on the economic outlook are also due for Germany and the Eurozone, but the outlook is bleak and investors are unlikely to react to any small improvement in sentiment.

Europe is still being weighed down by energy prices and the Russia/Ukraine situation adds a risk premium to the coming months as both sides remain fixed on their demands.

European is also ramping up its virus mandates and fines, which will have an added weight on the economy as many avoid shops and restaurants.

Older people not vaccinated against Covid-19 in Greece will now face monthly fines of $115 as of Monday, as governments across Europe turn up the heat on the minority. We could start to see these non-vaccinated taxes rise across the continent in the months to come.

Italy has made vaccination compulsory for over-50s, expanding existing restrictions that bar unvaccinated people from public transport and restaurants and bars.

Austria is going a step further with fines of up to $4,100 for vaccine holdouts. These rules are becoming extreme at a time when data on the vaccines offering immunity is waning, while the EU regulators said that boosters can lower the immune system. We can expect further civil unrest in Europe as the months go by.

UK still seeing a drop in coronavirus daily cases

UK virus cases have dropped 40% over the last week with hopes that the Omicron variant has peaked.

The UK is going the other way to Europe, with health secretary Sajid Javid saying that vaccine passports will be scrapped this month.

Health Secretary Sajid Javid has apparently told MPs that he shared an “instinctive discomfort” at the policy, according to the Times. It is said that he wants to “effectively kill off the policy,” when Plan B measures are reviewed on January 26th.

A Whitehall insider reportedly told The Times: “There was always a very high threshold for the policy and it looks increasingly likely in a couple of weeks that threshold won’t be met.”

The euro faces a myriad of risks this year with governments becoming more authoritarian towards the virus, energy prices in the balance over Russia, and a central bank that doesn’t want to raise interest rates despite soaring inflation.