- Pound (GBP) supported by strong encouraging data
- UK CPI expected to show 0.6% increase MoM in April
- Euro (EUR) boosted by weak USD & reopening optimism
- Eurozone CPI expected to slow to 0.6% MoM in April
The Pound Euro (GBP/EUR) exchange rate is edging lower on Wednesday, extending losses from the previous session. The pair settled -0.2% lower on Tuesday at €1.1605, at the low of the day. At 05:45 UTC, GBP/EUR trades -0.05% at €1.1600.
The Pound traded lower versus the Euro but gained ground versus other major peers in the previous session. Sterling received a boost from bumper UK jobs data. The unemployment rate unexpectedly slipped lower in the three months to March to 4.8%, down from 4.9% in February. This was the third straight month that the unemployment rate declined suggesting that the labour market may have turned a corner. The government’s furlough scheme continues to keep the labour marker supported and will remain in place until the autumn.
The report showed other early signs of a recovery. For example, the number of employees on payrolls rose for a 5th straight month and the claimant count unexpectedly fell by 15,100. Analysts had been expecting an increase in claims by around 25,000.
Today UK inflation data is in focus. Attention will now turn to the UK inflation data. Expectations are for consumer prices to rise 0.6% in April compared to March.
The Euro moved higher despite uninspiring GDP data, thanks to the weaker US Dollar. The Euro trades inversely to the US Dollar and the greenback tanked on a dovish Fed comments.
Eurozone GDP data came in as expected, confirming the -0.6% contraction in the first three months of the year. However, Euro investors were prepared to look past this backward looking data, on the hopes that the the bloc’s economy will experiencing a boom on the reopening.
Covid cases are slowing on the old continent and countries such as Spain and France are starting to ease lockdown restrictions which is adding to the upbeat mood surrounding the common currency.
Eurozone inflation data will be in focus today. Analysts are expecting consumer prices in the region to rise 0.6% month on month in April, down from 0.9% growth in the previous month.