EUR/GBP Exchange Rate Falls as UK Employment Data Boosts Hopes for UK’s Economic Recovery
The Euro to Pound (EUR/GBP) exchange rate fell by -0.2% today, with the pairing currently trading around £0.89.
The Pound (GBP) edged higher today after the UK unemployment rate for May remained in suspended animation at 3.9%. As a result, some Sterling investors were relieved that joblessness had held steady despite fears of it rising last month.
Minister for employment Mims Davies commented:
‘[O]ur furlough scheme, grants, loans and tax cuts have protected thousands of businesses and millions of jobs, setting us up for recovery.’
Neil Carberry, CEO of the Recruitment and Employment Confederation, was also upbeat, saying:
‘But with the lockdown being eased and the economy opening up, hiring should grow. The scale of the growth in unemployment through the rest of the year will depend on consumer confidence and how employers react to the winding down of the furlough scheme.’
In other UK economic data today, Britain’s industrial production fell below forecasts. However, this improved lightly in May at 1.4% against -12.5% in the previous month. Nevertheless, GBP investors are feeling jittery over the UK’s manufacturing and industrial sector’s slow recovery.
Euro (EUR) Sinks Despite Growing Hopes for Germany’s Economy
The Euro (EUR) failed to gain against Sterling today despite Germany’s improvement in its economic sentiment gauge for June. The ZEW indication of Economic Sentiment improvement for the third consecutive month this month, with the figure up to 63.4.
Achim Wambach, ZEW president, said:
‘There is growing confidence that the economy will bottom out by summer 2020. This is reflected in the renewed rise of the ZEW Indicator of Economic Sentiment, as well as the more optimistic assessment of the current situation.’
As a result, the Euro (EUR) improved against some of its peers, but this was not enough to push the EUR/GBP exchange rate higher. Instead, investors are generally remaining cautious around the EUR on mixed forecasts over the bloc’s economic recovery in the months ahead.
Today also saw Germany’s final harmonised index of consumer prices for May confirm forecasts and remain at 0.5%. However, with recent gloomy forecasts for Germany’s economy going forward, this left some EUR investors feeling jittery.
EUR/GBP Outlook: Could Downbeat UK Inflation Data Send Sterling Downward?
Euro (EUR) investors will be looking ahead to tomorrow’s release of the Eurozone’s CPI figures for May. However, if these confirm consensus and fall by -0.1%, then we could see the EUR/GBP exchange rate continue to fall.
Tomorrow will also see the release of the final UK CPI figure for May. As a result, we could see Sterling suffer if this falls below forecasts.
The EUR/GBP exchange rate will remain sensitive to the UK’s coronavirus situation this week. Any further hints that Downing Street could ease its lockdown measures would prove GBP-positive.
