The Pound Euro exchange rate was trending higher in this morning’s session after a better-than-expected unemployment rate from the UK supported Sterling.
At the time of writing the pair are currently trading at around 1.1605, after the Pound gave up those gains.
Pound (GBP) Dips despite Falling Unemployment Rate
The Pound found support this morning after the ONS reported that UK unemployment had fallen to 5% in January.
The unemployment rate in the UK remains 1.1% higher than a year ago before the pandemic struck.
Ruth Gregory, senior UK economist at Capital Economics commented on the latest unemployment figures:
‘The drop in the unemployment rate from 5.1% in December to 5.0% in January highlights once again the extent to which the government’s job furlough scheme has protected jobs during the pandemic.’
‘We still expect the unemployment rate to rise further to a peak of 6.0% by early 2022, but that would be a much better result than most feared only a few months ago.’
As the UK marks one year since the first national lockdown was announced, 27 million people in the UK have now received a vaccine.
Though the row between the UK and EU over vaccine exports continues.
Prime Minister Boris Johnson is hoping to ease tensions between the two before the EU meets on Thursday to discuss their own delayed rollout.
Euro (EUR) Struggles over Renewed Lockdowns across Eurozone
The Euro is struggling this morning as Germany announced that it would be extending its lockdown measures until after the Easter period.
Speaking at a press conference last night, Chancellor Angela Merkel said:
‘We are now basically in a new pandemic. The British mutation has become dominant.’
Merkel also showed support for blocking the AstraZeneca vaccine from being exported, as markets await an EU summit on Thursday:
‘I support Commission President Ursula von der Leyen. We have a problem with AstraZeneca. We will decide responsibly.’
The Euro has been supported by a risk-off market mood, which has strengthened the safe-haven US Dollar and Euro.
Pound Euro Exchange Rate Forecast: Flash PMI Data in Focus
For Pound and Euro investors alike the release of flash PMI figures from the UK and Eurozone for March could give an insight into how the respective economies are performing.
The flash Eurozone PMIs, are expected to improve slightly, however will likely indicate a contraction in the private sector overall.
As the UK economy begins to reopen, a modest growth is expected in the services sector which would be GBP-positive.
UK inflation data for February is also expected to show a slight increase for February which would further support Sterling.
The Pound Euro exchange rate will be further driven by any coronavirus and vaccine row developments.