- Pound (GBP) trends lower as covid woes dominate
- Unemployment expected to rise to over 5%
- Euro (EUR)
- German IFO business confidence decline
The Pound Euro (GBP/EUR) exchange rate is falling lower on Tuesday. The pair settled +0.1% on Monday at €1.1263 in range bound trading. At 05:15 UTC, GBP/EUR trades -0.1% at €1.1250.
The Pound is trading on the back foot as covid fears remain front and central. Whilst the number of new daily infections are falling the death toll keeps climbing as it approaches 100,000. At the same time concerns are also rising that the new UK variant is not only more transmissible but also more deadly.
Today attention will be firmly on the British labour market. The ILO unemployment rate is expected to rise over 5% in the three months to November for the first time since before the Brexit referendum in 2016.
The claimant count which is paints a more accurate picture of the labour market is expected to increase to 7.5%, up from 7.4%
Back in November, the Chancellor Rishi Sunak had forecast unemployment peaking at 7.5% in the second quarter of 2021. However, that was before lockdown 3.0. With the reopening of the economy now being pushed back even further there is a good chance that job losses will stack up even higher in the coming weeks and months
The Euro cane under pressure in the previous session following following disappointing German IFO business confidence data. The German IFO survey revealed that both components – business expectations and assessment of the current situation deteriorated by more than expected. Rising covid cases and tighter lockdown measures are dampening sentiment with companies becoming more pessimistic about the coming six months.
Looking ahead there is no high impacting Eurozone data due to be released today. Investors will focus on covid developments and news flow suggesting that there is as shortage of vaccines in the bloc due to production issues.