GBP EUR Exchange Rate: Weekly Review July 2nd   

GBP EUR Exchange Rate: Weekly Review July 2nd   

The GBP EUR exchange rate failed to find traction this week despite weaker data from the European economy. Manufacturing slowed in the German economy and services weakened in the eurozone. Germany also had a big jump in unemployment of 133k due to Ukrainian refugees joining the job search. 

The GBP v EUR headed for the weekend looking to hold onto the 1.1600 support level. 

German economy struggles with manufacturing and jobless rate 

German economic data was weaker this week after manufacturing slipped to 52 in the S&P Global S&P figures. The number hoovers near the 50 level which marks contraction, according to current trends. The data was the same as the European numbers with services near contracting , potentially hinting at an imminent recession. 

For the European economy, it was Spain’s inflation rate that weighed heavier with a jump from 0.8% to 1.6% – the highest level since 1982. The European Central Bank Chief said the Bank may move “faster” but are “data dependent”.  

“If the inflation outlook does not improve, we will have sufficient information to move faster. This commitment is, however, data dependent,” she said. 

The comments may highlight once again that the ECB ignores clear inflationary signs in a hope that the numbers tail off in the second half of the year. 

On Thursday, we saw a steep jump in German unemployment levels due to Ukrainian refugees joining the labour market. Economists expected a drop of 6,000 in the jobless rate but 133k new names were added. That also saw the unemployment rate jump from 5% to 5.3%. 

“The labour market overall remains stable,” said Detlef Scheele at the Labour office. However, with a rise in jobless, “this increase is due to the fact that Ukrainian refugees are now being recorded at job centres and are thus visible in the labour market statistics.” 

‘All options on the table’ for the Bank of England 

The Bank of England Governor Andrew Bailey said that ‘all options are on the table’ to tackle the inflation rate. 

“It leaves options on the table and that is very deliberate,” Bailey told an audience at the European Central Bank forum in Portugal. 

“I want people to take the message, as we respond to the shock, that we want to have options on the table. There will be circumstances where we have to do more,” Bailey said. 

He added that if inflation is more persistent, “then we will act more forcefully and we will have to.” 

Christine Lagarde, president of the ECB also gave a speech and said: “I don’t think we will go back to the world of low inflation.” 

Nationwide house prices from the UK showed that there was no steep fall in housing with a slight dip to an annual 10.7% price increase. But there were warnings of worse times ahead. 

Nationwide’sRobert Gardner, said: 

“The market is expected to slow further as pressure on household finances intensifies in the coming quarters, with inflation expected to reach double digits towards the end of the year.” 

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