The GBP EUR exchange rate was 0.14% higher on Tuesday despite better-than-expected jobs data out of Germany. Europe’s largest economy saw its unemployment rate improve to 5.2% but traders are likely concerned about later data. Boris Johnson helped the British Pound by saying there would be no further restrictions at the moment but meets ministers today.
The GBP to EUR is trading at 1.1955 with the 2020 highs of 1.2000 in reach.
PM Johnson to hold another cabinet meeting over virus
The Prime Minister is meeting with senior ministers today to discuss the latest virus data as they consider whether the decision to hold off on further restrictions is working.
Boris Johnson will decide whether to fold to further pressure from scientists and introduce tough new restrictions. Scotland, Wales and Northern Ireland all added extra measures before Christmas in a bid to slow the pressure on the NHS.
Today is the first time Johnson will have met with ministers this year to discuss the situation. Yesterday, the Prime Minister said he still believed “the way forward for the country as a whole is to continue with the path that we are on” but admitted the NHS is under pressure and action might be needed if the situation worsened.
He said, “there’s no question Omicron continues to surge through the country”, adding: “I think we’ve got to recognise that the pressure on our NHS, on our hospitals, is going to be considerable in the course of the next couple of weeks, and maybe more.”
There is no economic data for the UK economy this week and traders will look to cues from the virus situation.
German employment sees improvement despite measures
German unemployment figures fell more than expected in December, according to data on Tuesday, in a further sign that the labour market remains resilient despite rising virus infections.
The Labour Office said that the number of people out of work fell by 23,000 in seasonally adjusted terms to 2.4 million, with a Reuters poll forecasting a drop of 15,000.
“The labor market developed well at the end of the year. The recovery of the previous months continued,” Labour Office chief Detlef Scheele said.
The seasonally-adjusted unemployment rate fell to 5.2%, for the lowest reading since March 2020, when Germany entered its first virus lockdown. Scheele cautioned that the jump in cases and renewed restrictions added increased uncertainties.
Inside the data, more companies signalled that they could soon put more workers on furlough once again.
In October, the last month where data was available, the number of employees put on reduced working hours, also known as Kurzarbeit, fell to 710,000. That was sharply lower than the peak, which was 6 million in April 2020.
Inflation data for France today saw the figure holding steady at 2.8% after analysts had expected 2.9%. That will cool sentiment for the euro ahead of the German and European inflation numbers this week. Italy will see inflation released today with a 3.9% number expected after 3.7% last month.
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