The Pound-To-Euro Exchange Rate Is Trending Sideways Despite Vital UK Job Data
The Euro Pound (GBP/EUR) remained range-bound today as both currencies rose in response to vital UK jobs data and a more significant than expected jump in economic sentiment in the Eurozone. A strong US dollar can also put pressure on the euro.
The GBP/EUR exchange rate is around €1,1952 at the time of writing, which is unchanged from this morning’s starting values.
Despite Record Contraction Levels, The British Pound (GBP) Is Falling
As the currency falters in a risk-averse environment, the British pound (GBP) fell against many peers. Although vacancies hit a record of 1.247 million in the fourth quarter of 2021, the United Kingdom (UK) added 184,000 people to the country’s workforce in December. The unemployment rate fell to 4.1% in the three months to November.
The Bank of England (BoE) should pay close attention to the data as signs of a labor shortage in a strong labor market could improve the outlook for early interest rate hikes.
Figures showing that real wage growth is currently lagging behind rising global inflation may prompt the Bank of England (BOE) to raise interest rates at its Feb. 3 meeting.
The expected rise in the inflation rate by the Bank of England in December could raise fears of more aggressive measures.
The Euro (EUR) Gains As Optimism About The Eurozone Recovery Grows
The Euro (EUR) appreciated against its riskier competitor currencies in the current risk-free trading environment. Still, they remained under pressure against safe currencies due to their negative correlation with the US Dollar.
The euro could rise today on significantly higher than expected readings for the Eurozone indices and the German ZEW Economic Sentiment Index. However, gains may be limited as levels remain well below expected. We saw it in the summer of 2021.
The number of COVID-19 cases in Europe will decrease in the coming months, just as the level of exports in Germany will improve. Achim Wamback, president of ZEW, had the following opinion on the numbers:
The economic outlook has improved so much since the beginning of the new year, and most financial market analysts predict that economic growth will accelerate over the next six months.
However, signs that the flu virus has returned to Europe at an alarming rate could further pressure the euro today. Experts fear the virus’s rapid spread could lead to a “double pandemic.”