- Pound (GBP) falls as Omicron fears grow
- Unemployment expected to tick lower
- Euro (EUR) rises after German wholesale inflation hit record levels
- ECB interest rate decision on Thursday
The Pound Euro (GBP/EUR) exchange rate is edging lower for a second straight day. The pair settled -0.16% lower on Monday at €1.1710 towards the low of the day. At 05:45 UTC, GBP/EUR trades -0.02% at €1.1708.
The Pound fell on Monday as Omicron fears mounted. The UK announced the first publicly confirmed death from Omicron as the new COVID strain swiftly spread across Britain. New cases of the variant are doubling every 2-3 days.
The news comes after Boris Johnson imposed tougher COVID restrictions and cautioned that a wave of Omicron was coming.
Today Omicron headlines will remain in focus, in addition to UK jobs data. The ILO unemployment rate is expected to fall to 4.2% in the three months to October, down from 4.3%. Attention will also be on the claimant count to see if the number of people claiming unemployment benefit continues to fall.
The health of the labour market will be very much under the spotlight as the Bank of England has said that they want to see how the labour market holds up as the governments furlough scheme unwinds. Continued improvement in the labour market could prompt bets that the BoE will hike interest rates in February.
This is the first piece of data in a busy week which sees the release of inflation numbers and retail sales figures in addition to the Bank of England’s monetary policy announcement.
The Euro pushed higher after German wholesale inflation jumped to 16.6% year on year in November, up from 15.2% in October. The record jump in inflation came mainly from increased prices for mineral oil products, which rose 62.4% on the year.
The wholesale inflation figure is often considered a lead indicator for consumer prices, suggesting that consumer inflation is unlikely to start slowing any time soon.
Looking ahead, eurozone industrial production data is due to be released. Industrial output growth is expected to have slowed in October to 3.4% year on year, down from 5.2%.