• Pound (GBP) supported by Chancellor’s rescue jobs support scheme
  • Covid cases hit 6634 in 24 hours
  • Euro (EUR) under pressure amid rising covid numbers
  • Fears grow that tighter lockdown restrictions could cause a double dip recession

The Pound Euro (GBP/EUR) exchange rate is trading higher on Friday for the third consecutive session. The pair settled on Thursday +0.1% at €1.0919, after rallying as high as €1.0976. At 05:15 UTC, GBP/EUR trades +0.1% at €1.0933. The pair is on track for 0.2% gains across the week, adding to 1% gains the previous week. However, GBP/EUR is still trading down -2.3% so far this month.

The Pound has been supported by Chancellor Rishi Sunak’s announcement of a scaled back job support scheme, to replace the current furlough scheme when it sends of 31st October. The Chancellor also announced plans to extend loan repayments for businesses and pushed back the end date for a tax cut for the hospitality sector – a sector most severely hit by the covid restrictions.

However, the chancellor also said that he wouldn’t be able to save every job and it would be wrong to do so.  Unemployment in the UK currently sits at 4.1%. It was expected to almost double to 7.5% by the end of the year if there had been no job support scheme following furlough.

The announcement came as the number of coronavirus cases in the UK reached 6,634. At the hight of the first wave around 100,000 were being infected per day.

The Euro has been under pressure this week as concerns over rising coronavirus cases in the old continent and the impact on the economy is innerving investors. Data this week showed that the service sector in the bloc unexpectedly slipped into contraction. Whilst yesterday’s German IFO sentiment data was surprisingly more upbeat than forecast, this was broadly shrugged off by investors.

With tighter lockdown restrictions expected, particularly in Spain and France, the risk of a double dip recession is growing.

There is no high impacting Eurozone data due to be released today, leaving the Euro vulnerable to sentiment.