Pound to Euro (GBP/EUR) Exchange Rate Steady as UK Unemployment is Expected to Soar by Christmas

GBP/EUR Exchange Rate Rangebound as UK ‘Job Market Outlook is Negative’

The Pound to Euro (GBP/EUR) exchange rate held steady this morning, with the pairing currently fluctuating around €1.103.

Sterling held steady this morning despite warnings from the Centre for Economics and Business Research (CEBR) thinktank that Britain could be heading for record levels of unemployment.

CEBR warned that at least 1.25 million people could be at risk of losing their jobs by Christmas.

The thinktank said:

‘The job market outlook is negative for the coming months … the coming winter looks set to be a tough one.’

Coronavirus news will remain in focus today after Downing Street warned that the UK is now at a ‘critical juncture’.

Prime Minister Boris Johnson is expected to unveil the three-tier alert system later this afternoon.

Any further signs of restrictions or lockdowns would weigh on the Pound as investors become increasingly concerned about Britain’s economic health in the months ahead.

A spokesperson for Downing Street said:

‘Our primary focus has always been to protect lives and livelihoods while controlling the spread of the virus and these measures will help achieve that aim. We must do everything we can to protect the NHS and make sure it can continue to deliver the essential services that so many people rely on.

GBP investors will be awaiting today’s speech from the Bank of England’s (BoE) Governor Andrew Bailey.

If he is notably dovish about the British economy, then the GBP/EUR exchange rate will suffer.

Euro (EUR) Steady as Concerns Grow over Eurozone’s Economic Performance

The Euro (EUR) failed to gain against the Sterling today following the release of Germany’s Wholesale Price Index for September.

These failed to buoy confidence in the Eurozone’s largest economy, with the month-on-month figure rising from -0.4% to 0%.

Meanwhile, single currency investors will be monitoring Europe’s coronavirus situation. If the rate of infection continues to creep higher, we could see EUR begin to fall against Sterling.

EUR traders will be awaiting today’s speech from the European Central Bank’s (ECB) President, Christine Lagarde.

Any downbeat comments about the Eurozone’s economic performance would prove EUR-negative.

GBP/EUR Forecast: Could Brexit No-Deal Fears Drag Down Sterling?

Pound (GBP) investors will be looking ahead to tomorrow’s release of the UK ILO Unemployment Rate for August.

If this continues to rise, we would see GBP fall on concerns for Britain’s economy.

EUR traders will be paying close attention to the Eurozone’s ZEW Survey of Economic Sentiment for October.

Any signs of deterioration in the bloc’s economic morale would prove EUR-negative.

The GBP/EUR exchange rate will remains sensitive to UK-EU Brexit trade negotiations this week.

Any further signs that the UK could be headed for a no-deal later this year would drag down Sterling.

David Moore

Contact David Moore