Higher UK Unemployment Rate Unable to Dent Pound Euro Exchange Rate
A rising UK unemployment rate was not enough to keep the Pound to Euro (GBP/EUR) exchange rate from pushing higher today.
While December’s unemployment rate rose from 5% to 5.1%, as forecast, this failed to put any particular pressure on Pound Sterling (GBP).
GBP exchange rates instead continued to push higher across the board, ignoring the labour market data in favour of optimism over the potential second quarter economic recovery.
With non-essential retail shops expected to reopen in April, in spite of strict social restrictions remaining in place, this gave investors fresh incentive to pile into the Pound.
Confirmation that the Eurozone inflation rate returned to positive territory in January failed to offer any boost to the Euro (EUR), meanwhile.
With the data already largely priced into EUR exchange rates there was little room for the single currency to push higher at this stage.
Positive Final Fourth Quarter German GDP Set to Boost Euro Appeal
However, as long as the finalised fourth quarter German gross domestic product remains positive this could offer the Euro a boost.
Evidence that the Eurozone’s powerhouse economy managed to hold onto a state of growth in the final months of 2020 would limit the potential for any fresh EUR exchange rate losses.
Even so, as the Euro already made gains on the back of the initial GDP report this may limit the ultimate impact of this latest release.
On the other hand, if the data sees any particular revisions from the initial report this could prompt some volatility for EUR exchange rates.
If growth fails to remain in positive territory this may leave the Euro vulnerable to increased selling pressure, especially as worries over Covid-19 continue to weigh on the economic outlook.
Resilient Nationwide Housing Prices to Offer Pound Euro Exchange Rate Encouragement
The Pound may find some fresh support heading into the weekend, meanwhile, if the Nationwide housing price report proves encouraging.
Another solid performance for the housing market could help to encourage a sense of optimism in the health of the UK economy, even in the face of a protracted national lockdown.
As long as house prices show an increase in February this may encourage bets of increased resilience, even in the wake of the government’s lacklustre lockdown exit plan announcement.
Another sharp decrease in car production on the year could weigh on demand for the Pound, though.
Fresh evidence of weakness within the UK manufacturing sector may leave the Pound to Euro exchange rate on the back foot, especially if recent Covid-19 vaccine optimism fades.