- Pound (GBP) was supported by upbeat Brexit developments
- UK labour market data in focus
- Euro (EUR) under pressure as US Dollar soared on vaccine news
- German ZEW sentiment data in focus
The Pound Euro (GBP/EUR) exchange rate is edging higher on Tuesday, extending gains from the previous session. The pair settled on Monday +0.5% higher at €1.1140, just 10 pips off the high of the day. At 05:15 UTC, GBP/EUR trades +0.05% at €1.1145.
Optimism surrounding a Brexit deal was growing at the start of the week as EU and UK officials resumed trade talks. Recent repots from both Prime Minister Boris Johnson and Chancellor Rishi Sunak is that significant progress has been made.
Attention will now turn to the UK labour market report due to be released. The report is expected to show that the YUK unemployment rate is rising despite Chancellor Rishi Sunak’s beat efforts to keep a lid on job losses. Last month, the unemployment rate showed that in the three months to August, the unemployment rate hit a three year high at 4.5%. The rate is expected to tick higher to 4.8% in the three months to September.
Each week, big names across retail and hospitality are announcing large scale job cuts with Sainsburys just announcing 3500 jobs are to go.
The claimant count, which is more up to date is expected to show an increase of 50,000 after rising by just 28,000 last month.
The data comes after Rishi Sunak just recently extended the very generous furlough scheme until the end of March. This scheme in effect masks the true impact of the covid pandemic on the labour market.
The Euro traded lower versus the Pound and the US Dollar after the greenback surged on the back of vaccine news from Pfizer, which announced hat its covid vaccine candidate was 90% effective.
Attention will now turn towards German ZEW sentiment data. Sentiment is expected to fall sharply again after tumbling to a 5 month low in October as covid cases rose and lockdown measures tightened. A very weak reading could unnerve investors.