- Pound jumps as UK unemployment falls – Historic high in number of employed
- BoE offers support for Sterling – Agents see little evidence of slowdown
- Euro harmed by falling confidence – Negative outcomes stack against single currency
- Eurozone confidence flash due this afternoon – UK retail sales stats and ECB decision due tomorrow
The Pound has been able to make considerable gains against the Euro and other rivals lately, with support being offered by the latest UK domestic data.
The Euro has slipped on the whole, likely due to growing signs that consumers are losing faith in the Eurozone economy after ‘Brexit’.
UK Economic News: Pound Sterling Soars as Unemployment Hits Historic Lows
The Pound has made a number of notable gains against its peers recently, with both domestic data and the Bank of England (BoE) offering significant support to the UK currency. This comes against a recent pessimistic growth downgrade for the UK by the International Monetary Fund (IMF).
In the former case, the UK unemployment rate for May has fallen from 5% to 4.9%, while average earnings including bonuses have risen from 2% to 2.3%. For the claimant count change in June, a shift from 12.2k to 0.4k has been seen, while average earnings excluding bonuses have fallen slightly from 2.3% to 2.2%.
The employment rate of 74.4% is especially significant, as this is has been the highest rate seen since 1971.
In the case of the BoE, the July 2016 Agents Summary of Business Conditions has been unusually positive, with agents stating that there has been little direct evidence that economic activity has been slowed by the EU Referendum outcome.
Sterling gains have consisted of 0.7% against the Euro (GBP EUR) and the US Dollar (EUR USD) and 0.8% against the Australian Dollar (EUR AUD).
Euro’s Appeal Mixed on Continued Low Confidence in Post-‘Brexit’ Eurozone
The single currency has taken a few knocks recently, although the latest slip in appeal seems to have been caused by a delayed reaction to prior confidence printings.
Yesterday, Germany and the Eurozone posted negative ZEW confidence surveys, while of late, the Netherlands have seen consumer confidence fall from 5 points to 1 in July.
Responding to the prior ZEW results for Germany that showed a drop in economic sentiment from 19.2 to -6.8, ZEW President Achim Wambach stated that:
‘Uncertainty about the [‘Brexit’] vote’s consequences for the German economy is largely responsible for the substantial decline in economic sentiment’.
Among the losses recorded for the Euro have been declines of -0.5% against the Pound Sterling (EUR GBP) and the South African Rand (EUR ZAR) and lesser declines of -0.2% against the New Zealand Dollar (EUR NZD) and the US Dollar (EUR USD).
Future GBP, EUR Forecast: Pessimistically-Predicted Eurozone Confidence Flash Out This Afternoon, ECB Decision Tomorrow
The near-future will bring the announcement of a notable Eurozone ecostat, which will consist of the multinational union’s consumer confidence flash for July.
In a similar story to yesterday’s disappointing confidence results, expectations so far have been for a worsening of already low confidence, from -7.3 points to -8.5.
Looking ahead, tomorrow’s notable Eurozone data will mainly consist of the early afternoon’s European Central Bank (ECB) interest rate decision and press conference for July.
The decision on interest rates is of paramount importance, as whether the ECB freezes or cuts the interest rate will be taken as a clear indicator of how seriously the central bank sees the impact of ‘Brexit’ on the Eurozone.
UK data will not be lacking in the near-term, as June’s retail sales stats are expected tomorrow morning; unfortunately for the Pound’s chances, estimates have been for a decline on both the month and the year.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP EUR) exchange rate was trending in the region of 1.1982 and the Euro to Pound Sterling (EUR GBP) exchange rate was trending in the region of 0.8347 today.
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