Pound Sterling Euro (GBP/EUR) Exchange Rate Falls on Steady German Unemployment
The Pound Sterling Euro (GBP/EUR) exchange rate slumped, leaving the pairing trading at around €1.1668.
On Friday morning, data revealed the number of unemployed Germans unexpectedly fell in February.
The data from the Federal Labour Office suggested that the country’s strong job market will support the bloc’s largest economy.
The number of Germans out of work fell by -10,000 despite markets expecting this figure to rise.
The single currency rose against the Pound as the unemployment rate remained steady at 5%.
Sterling (GBP) Slides as Covid-19 Likely to Impact Consumer Spending
This morning, data revealed that UK consumer confidence rose to the highest level since August 2018. Optimism about the country’s economy increased the willingness of households to purchase big-ticket items.
Despite consumers expressing concern about their personal finances, GfK’s confidence index rose to -7 in February from -9.
Recent UK data suggested the economy is beginning to rebound as political headwinds were removed. Although the country is in a transition period with the EU until the end of the year.
However, GfK warned that the outbreak of Covid-19 could start to impact consumer spending and behaviour as the UK has reported 15 cases so far.
Meanwhile, on Thursday the Pound suffered losses after the country emphasised its hardline stance on UK-EU trade talks.
The UK said that it would be ready to walk away from negotiations if ‘good progress’ was not made by June, dampening Sterling sentiment.
Added to this, the British currency suffered losses as markets expect Chancellor Rishi Sunak’s March budget to disappoint.
Previous expectations that Sunak would increase public spending which buoyed GBP were squashed after he was told by Treasury officials that he cannot simultaneously increase public spending and keep taxes low as the Prime Minister wanted.
Pound Euro Outlook: Will Budget Pessimism Continue to Weigh on GBP?
Looking ahead to next week, the Euro (EUR) could edge higher against the Pound (GBP) following the release of German manufacturing data.
If Markit reveals Germany’s manufacturing PMI has increased more than expected, showing the sector could see growth soon, the single currency will rise.
Meanwhile, Sterling could edge up slightly following the release of the UK manufacturing PMI.
However, further disappointment ahead of March’s UK budget could offset any upbeat manufacturing data, and cause the Pound Euro (GBP/EUR) exchange rate to slide.