The Euro has advanced against the Pound today, with the EUR/GBP exchange rate edging higher thanks to fresh UK election fears and a historic drop in German unemployment.
- EUR GBP rate trades up at 0.8731 – GBP EUR drops to 1.1451
- Euro boosted by falling German unemployment – Lowest result since reunification
- Pound remains weak after election scare – Latest polls imply no Conservative majority
- Eurozone manufacturing stats out Thursday – Further Pound losses possible on election debate
Euro (EUR) exchange rates have been supported today by the German unemployment rate for May. Monthly unemployment has fallen from 5.8% to 5.7%, a predicted outcome but still the lowest level since the reunification process in the early 1990’s.
Offering a succinct summary was Federal Labour Office head Detlef Scheele;
‘Given the good economic conditions, the labour market continues to do well. The demand for labour remains very high too’.
While the actual number of unemployed persons did not fall by as much as forecast, the Euro has nonetheless been boosted by the news.
Other Eurozone announcements have been more mixed, showing a dip in annual French inflation and a contraction in German retail sales in April. Rounding off daily Eurozone news has been a greater-than-expected slowdown in inflation in May, but a drop in Eurozone-wide unemployment from 9.4% to 9.3%.
The latest Pound movement has been negative, with Sterling still recovering from an earlier election-linked shock. When a poll came out suggesting that the Conservatives might fail to secure a majority win, the Pound fell against the Euro from 1.1496 to 1.1442.
This slump came from fears that if the polls were right, a Labour government or coalition could become the leading group in Parliament.
Despite seemingly waning confidence in the Prime Minister, traders remain hopeful that the Conservatives will take a landslide victory as this could improve the UK’s hand in Brexit talks.
These forecasts should be taken with a handful of salt, however, as The Times points out;
‘The poll allows for big variations and suggests that the Tories could get as many as 345 seats on a good night, 15 more than at present, and as few as 274 seats on a bad night’.
Thursday’s Eurozone data will cover manufacturing PMIs across the Eurozone. Crucially, Eurozone and German results are expected to show growth, which could further raise the EUR GBP exchange rate.
The next UK data will be Thursday’s manufacturing PMI for May, which is predicted to show a slight slowdown in activity. Expectations are still for continued growth in the sector, however, so the Pound may not slump on such an announcement.
Current Interbank EUR GBP Exchange Rates
At the time of writing, the Euro to Pound (EUR GBP) exchange rate was trading at 0.8731 and the Pound to Euro (GBP EUR) exchange rate was trading at 1.1452.