The Pound Euro (GBP/EUR) exchange rate has retreated today despite an unexpected fall in unemployment in the UK.
The GBP/EUR paring are currently trending around the 1.1623 level as the Euro firms on the US Dollars weakness.
Pound (GBP) Weakens Despite Better-Than-Expected UK Employment Data
The Pound has weakened against the Euro today despite a better-than-expected employment data release from the UK this morning.
Markets had expected unemployment to edge up to 5% during March as much of the UK remained under strict lockdown measures, however unemployment instead fell to 4.8%.
The Office for National Statistics commented on the data that:
‘Following a period of employment growth and low unemployment, since the start of the pandemic employment has generally been decreasing and unemployment increasing.’
‘However, the latest (January to March 2021) estimates show signs of recovery, with a quarterly increase in the employment rate. Meanwhile, there was a quarterly decrease in the unemployment rate and the economic inactivity rate increased on the quarter.’
The fall in unemployment was not enough to bolster Sterling however as concern over the Indian variant of the virus causes investors to remain cautious.
Euro (EUR) Supported by US Dollar Weakness
The Euro (EUR) has seen itself heading higher for much of the day as a broad weakness in the US Dollar leaves investors heading to the single currency.
This comes as an upbeat marked mood has dented the appeal for the safe-haven US Dollar.
However, limiting Euro gains today has been the release of the latest GDP growth rate estimate from the Eurozone for Q1 which appears to confirm that the bloc fell back into a double-dip recession after contracting 0.6%.
Robert Alster at Close Brothers Asset Management, commented on the latest estimate saying:
‘The risk now is that the north/south divide continues to widen. Germany’s economic growth is not far behind the UK’s, with its vaccination programme set to overtake, whereas Spain’s economy has been hardest hit.’
Pound Euro Exchange Rate Outlook: Inflation Rate Data in Focus
For both the Pound and Euro, tomorrow’s inflation rate data from the UK and Eurozone is sure to drive movement in the pairing.
For Pound traders, the latest release is expected to show an increase in inflation which is thought to have edged up to 0.6% month-on-month, as the country slowly left the strictest lockdown restrictions.
Eurozone inflation is forecast to have fallen 0.3% to 0.6% month-on-month which could see EUR weaken against GBP tomorrow.