The British pound is lower against the euro on Wednesday.
Market sentiment was shaky after data showing twenty million Americans lost their job in April while ongoing concern about the speed of the United Kingdom’s exit from lockdown were weighing on the pound.
The euro edged up over the pound, helped by better than previously estimated service sector data but gains were limited by ongoing concerns over the German constitutional court ruling.
GBP/EUR was lower by 35 pips (-0.30%) to 1.1436 as of 3pm GMT.
A failure to most above 1.15 during European trading hours saw the currency pair turn lower on the day to below 1.145. Yesterday the exchange rate rose +0.59% and so far this week it is up by +0.50%.
GBP: Huge American job losses hit sentiment
The pound was lower and Wall Street gave up an early rise to turn lower after private payrolls data from ADP showed an employment change of -20.23M in April. It is the biggest loss of jobs in one month ever recorded by a wide margin. To give some context in March, the data was revised to -149K from -27K first reported.
EUR: Villeroy comments on German court
Some optimism was to be found in economic data and the ongoing gradual easing of lockdown measures in Germany, Europe’s biggest economy. German Chancellor Angela Merkel said on Wednesday that “We are at a point where we can say we have reached goal of slowing virus protecting healthcare system.”
While the euro held up against the pound on Wednesday after two days of losses, it was a different story against other currencies. The euro-yen (EUR/JPY) exchange rate fell to its lowest since 2016.
The ECB’s Villeroy was speaking on Wednesday and made specific reference to the German court decision yesterday about the proportionality of the ECB’s QE program, saying “We will be as flexible as required in particular to avoid euro area fragmentation caused by unjustified interest rate increases in some countries.” Fragmentation is another word for the breakup of the Eurozone, the risk of which is beginning to be priced into the euro.
