Pound Euro (GBP/EUR) Exchange Rate Trends Sideways amid Strong UK Jobs Data
The Pound Euro (GBP/EUR) exchange rate has remained rangebound today as both currencies climb following positive UK jobs data and an above-forecast rise in Eurozone economic sentiment. The Euro may also be facing pressure from a strong US Dollar.
At time of writing the GBP/EUR exchange rate is at around €1.1952, virtually unchanged from this morning’s opening figures.
Pound (GBP) Dips despite Record Hiring Levels
The Pound (GBP) has dipped against many of its rivals as the currency falters amid a risk-averse trading environment.
The UK added a record 184,000 employees to the country’s workforce in December despite open job vacancies hitting a record 1.247 million in the fourth quarter of 2021. The country’s unemployment rate for 3 months to November also fell to 4.1%.
The data is likely to be closely watched by the Bank of England (BoE), as evidence of labour shortages amid a buoyant job market may increase chances of an early interest rate hike. Figures indicating that real wage growth has now fallen behind the pace of soaring global inflation could also push the BoE towards a rate hike following their 3 February meeting. Wednesday’s forecast rise in December’s rate of inflation could also prompt further speculation of hawkish moves by the BoE.
Euro (EUR) Ticks Upward as Confidence for Eurozone Recovery Soars
The Euro (EUR) has risen against its riskier rivals today amid a risk-averse trading mood, but has remained under pressure against safe-haven currencies due to its negative correlation with the US Dollar.
Well above-forecast figures for both the Eurozone and German ZEW economic sentiment indexes may help push the Euro up today, although gains may be limited as the levels are still well below those from summer 2021. The rise in confidence is thought to be due to assumptions that Covid-19 cases across the continent will fall in the coming months, as well as rising export levels in Germany.
ZEW president Achim Wamback had the following viewpoint on the figures:
‘The economic outlook has improved considerably with the start of the new year. The majority of financial market experts assume that economic growth will pick up in the coming six months.’
The Euro could face some additional pressure today however following reports that the influenza virus has returned to the continent at an alarming pace. Experts are concerned that the fast pace of the virus’s spread could lead to a ‘twindemic’.