GBP/EUR Exchange Rate as UK Joblessness Rises amid Brexit Uncertainty
The Pound to Euro (GBP/EUR) exchange rate held steady today, with the pairing currently trading around €1.095.
The Pound (GBP) held steady today after UK redundancies hit a record high through August and October, sparking off further concerns for Britain’s job crisis.
Today saw the release of the UK unemployment rate data for the three months up to October. The figure revealed an increase of 4.9% in joblessness.
The Office for National Statistics commented:
‘August to October 2020 estimates show a large increase in the unemployment rate and a record number of redundancies, while the employment rate continues to fall.’
Nonetheless, Mims Davies, the British Minister of Employment, was more optimistic, saying that the Covid-19 vaccine would see ‘hope on the horizon for 2021.’
Meanwhile, Brexit developments have taken a more positive turn after Michel Barnier, the EU’s Chief Negotiator, said that a UK-EU deal was possible within days.
Barnier said that Downing Street had now ‘accepted a mechanism of unilateral measures’, such as tariffs, which had increased the odds of a trade agreement between the two sides.
A spokesman for Number 10 said:
‘We’ve been clear that we will continue to work, and hope to reach a free trade agreement. Obviously, no deal is a possible outcome. Time is in very short supply and it has been for some time.’
Euro (EUR) Steady as Germany is Due to Return to Lockdown in January
The Euro (EUR) failed to make any gains on Sterling this morning following this week’s news that Germany would re-enter a lockdown in January to prevent the spread of Covid-19.
As a result, EUR traders are becoming increasingly worried that a lockdown of the Eurozone’s largest economy could trigger a double-dip recession.
Jörg Krämer, chief economist at Commerzbank, commented:
‘Germany must brace itself for a second recession. The additional closures affect, among other things, all stores except those for daily needs . . . hairdressers and largely schools and day care centres for children.’
Meanwhile, Germany has demanded the European Union’s regulatory agency that the Covid-19 vaccine be approved before Christmas.
German Health Minister Jens Spahn said on Monday that it was their goal to approve a coronavirus vaccine before Christmas so that they can start vaccinating this year.
Consequently, EUR traders are becoming steadily more hopeful that a Covid-19 vaccine rollout could aid the Eurozone’s economic recovery throughout 2021.
GBP/EUR Outlook: Could a Recovering UK Services Sector and Brexit Deal Boost Sterling?
Euro (EUR) traders will be awaiting tomorrow’s release of the flash Eurozone Markit PMI Composite for December.
Any signs that the Eurozone’s economy struggling in the final month of the year would be EUR-negative.
Tomorrow will also see the release of the preliminary German Manufacturing and Services PMI for December.
Again, any indications that the Eurozone’s powerhouse economy is being severely tested by the Covid-19 crisis would drag down the EUR/GBP exchange rate.
Pound (GBP) investors will be monitoring tomorrow’s release of the flash UK Services PMI for December.
If this confirms forecasts and emerges from contraction territory, we could see Sterling rise.
Brexit developments will continue to drive the GBP/EUR exchange rate.
We could see the Pound (GBP) head higher if UK-EU trade talks show progress towards a possible trade deal.