• Pound (GBP) fell on Monday as PM delays final re-opening
  • UK unemployment expected to tick lower to 4.7%
  • Euro (EUR) boosted by weak USD & strong industrial production
  • German CPI & Eurozone trade balance

The Pound Euro (GBP/EUR) exchange rate is holding steady on Tuesday after mild losses in the previous session. The pair settled -0.15% lower on Tuesday at €1.1640 after picking up off a low of €1.1619. At 05:45 UTC, GBP/EUR trades -0.01% at €1.1639.

The Pound came under pressure after Prime Minister Boris Johnson delayed the plan to lift all lockdown restrictions by 4 weeks. Most social distancing restrictions were planned to be eased on Monday which would have allowed pubs, restaurants, bars and other hospitality venues to completely re-open.

The additional time would give the UK more time to accelerate the vaccine programme, shorting the time between doses for those over 40 to 8 weeks from 12 weeks.

The delta variant of covid is around 60% more transmissible. New covid cases in the UK hit 7742 on Monday, up 64% from the previous week. The number of people in hospital was also rising.

Attention will now turn to the UK economic calendar which ramps up as from today. The ILO unemployment numbers will be in focus. Analysts are expecting the unemployment rate to drop to 4.7% in the three months to April, down from 4.8% as the furlough scheme continues to mask the real impact of the pandemic. The claimant count, which is a more accurate picture of the labour market showed -15,000 in April as people came off furlough and re-entered the workforce. Another negative figures could lift sterling.

The Euro gained ground at the start of the week thanks to the softer tone surrounding the US Dollar and as industrial production in the region grew at a faster pace than expected in April.

According to Eurostat, industrial production rose by 0.8% month on month, up from 0.4% in March. Analysts had penciled in a 0.4% rise in April as well. There was some weakness in Germany, which reported a -0.3% decline. However, Spain & Italy saw industrial output rise by 1.1%.

German inflation data will be in focus today. Analysts will be looking for confirmation of the initial reading of 2.4% year on year. The Eurozone trade balance is also due to be released.