- Pound (GBP) slips as BoE highlight labour market weakness.
- Covid cases climb 90% over the week.
- Euro (EUR) digests GDP upward revision, weak German industrial production
- ECB rate decision on Thursday
The Pound Euro (GBP/EUR) exchange rate is treading water after mild losses in the previous session. The pair settled slightly lower on Tuesday -0.07% at €1.1623 after falling as low as €1.1591 earlier in the session. At 05:45 UTC, GBP/EUR trades flat at €1.1631.
The Pound came under pressure in the previous session following comments from the Bank of England’s chief economist Andy Haldane. He said on Tuesday that uncertainties surrounding the British labour market were “pretty acute” despite vaccines ands employment bouncing back quickly from the pandemic crisis.
He highlighted the fact that there are still 3 million workers on furlough in the UK which means that significant uncertainties in the labour market still exist.
There is no high impacting British economic releases which means that attention will be firmly on covid numbers and the possibility of the UK easing the final pandemic restrictions on 21st June. Covid cases are up 90% across the week and deaths are also climbing.
The Euro pushed higher on Tuesday despite a mixed bag of data. The Eurozone GDP was unexpectedly upgraded revealing a 0.3% contraction in the first three months of the year, up from -0.6% contraction.
However, German industrial production unexpectedly fell in April by 1%, down from 2.2% increase in March and well short of the 0.5% rise analysts had penciled in. Supply constraints are holding back output and concerns are growing that this could drag on growth in the Eurozone’s largest economy going forward.
German economic sentiment also unexpectedly fell in June to 79.8, down from 84.4. Despite the fall morale is still high amid expectations of a strong economic recovery from the pandemic.
There is no high impacting data due from the Eurozone tomorrow. Instead, investors will be looking ahead to the European Central Bank meeting on Thursday. The ECB are expected to retain a dovish stance. Any hints as to when taper talk could begin could send the Euro sharply higher.