- Pound (GBP) boosted by PM’s reopening plan
- UK Unemployment data in focus
- Euro (EUR) boosted by strong German business sentiment data
- EZ inflation up next
The Pound Euro (GBP/EUR) exchange rate is consolidating for a second consecutive day. The pair pair settled approximately flat on Monday at €1.1566 in the middle of the daily traded range. At 05:15 UTC, GBP/EUR trades just 3 pips lower at €1.1563.
The Pound surged higher in the previous session after Prime Minister Boris Johnson set out a phased plan to reopen the British economy. The plan set out 4 stages with 5 weeks between each phase.
Schools have been prioritized and will return on 8th March. Should all go to plan the final set of restrictions will be lifted at the earliest the 21st June.
With over 130,000 covid deaths and the deepest economic contraction for over 300 years, the UK has been one of the hardest hit countries from the pandemic. However, the vaccine rollout has been rapid which when combined with the lockdown restrictions has resulted in infections falling sharply to just under 10,000 per day.
Attention will now turn towards the unemployment data, which could tick higher in the three months to December, edging above 5% for the first time since the Brexit referendum in 2016. The BoE expects UK unemployment to reach a peak 7.5% in Q2. The monthly jobless claims numbers could well be a truer reflection of what’s going on in the labour market. In December it reached 7.4% and claims are expected to rise to 7.5% in January.
The Euro traded firmly in the previous session supported by a weaker US Dollar and encouraging data.
German IFO business sentiment jumped in February despite the ongoing covid lockdown. The business climate rose to 92.4 from 90.3 in January and well ahead of expectation of 90.5. The bulk of the improvement is seen in the expectations component suggesting that businesses are looking through the near term lockdown ahead to the recovery.
Investors will now look to Eurozone inflation data as measured by consumer price index. Analysts are expecting confirmation of -0.2% growth month on month. A weaker reading could drag on the common currency.