The Pound to Euro exchange rate surged to fresh highs on Wednesday after Sterling was boosted by the news that the level of joblessness in the UK fell by more-than-anticipated in the three months to April.
Prior to the publication of UK employment data the Pound was trading in the region of an 18-month high against the Euro and was holding steady against the US Dollar.
Sterling was moderately supported yesterday by the release of better than expected UK manufacturing/industrial production reports and held gains against the Euro thanks to positive statements from the National Institute of Economic and Social Research.
After publishing its GDP estimate for May, NIESR asserted that the UK economy is now performing above pre-crisis levels.
While the US Dollar was holding its own against the Pound thanks to an upbeat US JOLTs job openings report, the divergence between the pace of recovery in the UK and Eurozone helped the Pound maintain the upper hand in the GBP to EUR exchange rate.
These gains were extended on Wednesday, and the Pound jumped by 0.35 per cent against the Euro and 0.25 per cent against the US Dollar as investors digested the UK’s latest employment report.
The Office for National Statistics figures revealed that the UK added a staggering 345,000 positions in the three months to April, smashing estimates for an employment gain of 270,000.
This jump pushed the domestic unemployment rate from 6.8 per cent to 6.6 per cent, beyond the five-year low of 6.7 per cent expected by economists.
The result supports the case for the Bank of England revising its current rate-hike projections and the report prompted this response from economist Stuart Green; ‘Over the next few months we’re expecting the rate to head down, possibly to 6 per cent. We’re looking for the first rate increase to come in November, and a big part of that is the strengthening labour market.’
Meanwhile, the number of people seeking unemployment benefits dripped by 27,400 in May – a steeper drop than anticipated.
However, not all of today’s employment figures topped projections.
UK average weekly earnings climbed by almost half the amount expected in the three months to April, rising by 0.7 per cent rather than the 1.2 per cent forecast. This was down from an increase of 1.7 per cent in the three months to March.
Weekly earnings excluding bonuses were up 0.9 per cent in the period rather than increasing by the 1.2 per cent hoped for.
In the hours ahead a lack of pertinent global economic reports could restrain Pound movement and ensure that the Pound to Euro exchange rate holds gains ahead of tomorrow’s French inflation data and the Eurozone’s industrial production figures.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6766,
Pound Sterling,,Euro,1.2397,
Pound Sterling,,Australian Dollar,1.7855,
Pound Sterling,,New Zealand Dollar,1.9573,
US Dollar,,Pound Sterling,0.5963,
Euro,,Pound Sterling,0.8074,
Australian Dollar,,Pound Sterling,0.5595,
New Zealand Dollar,,Pound Sterling,0.5100,
[/table]
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