- Pound (GBP) holds as Chancellor Rishi Sunak to announce post furlough plan
- Wage support scheme expected
- Euro (EUR) slipped after service sector unexpectedly contracted
- German IFO sentiment data in focus
The Pound Euro (GBP/EUR) exchange rate is holding steady in early trade on Thursday after rising in the previous session. The pair settled +0.3% on Wednesday at €1.0908, snapping a four-day losing streak. At 05:15 UTC, GBP/EUR trades flat at €1.0908
The Pound rose on reports that the Chancellor Rishi Sunak will unveil new emergency schemes to prop up jobs and businesses as the UK heads towards what is shaping up to be a very difficult, challenging winter.
Rishi Sunak has abandoned his planned budget which was going to set out a long term recovery plan and will instead set out immediate measures to avert a wave of business closures and rising unemployment.
The centre piece to the package, which will be announced around midday UTC, is expected to be a wage support scheme. A scheme to subsidise wages of people in part time work, which would replace the £39 billion furlough scheme that ends at the next of next month.
Recent official figures show around 5 million people were still relying on the job support programme for some or all of their income at the end of July. This is mainly concentrated in the hospitality and entertainment sectors.
There are no high impacting data releases today.
The Euro has been under pressure as concerns grow over the steep rise in coronavirus cases on mainland Europe. France and Spain are seeing a sharp jump in cases and localised lockdown are on the rise which could derail the fragile economic recovery. Data yesterday showed that activity in the service sector unexpectedly contracted in September as the recovery comes under pressure, although the manufacturing sector performed slightly better than expected.
Looking ahead German IFO sentiment data will be in focus. Expectations are for a slight uptick in in sentiment which could offer some support to the Euro.