The EUR to GBP exchange rate was 0.06% lower in early trading on Monday as the market awaits German IFO business sentiment today. This will be followed by the latest UK unemployment release and will be sandwiched between Boris Johnson’s announcement on easing the country’s lockdown measures.
EURGBP currently trades at 0.8640 after a push below the April 2020 lows at 0.8685 last week.
UK employment outlook still looks bleak
According to a report released last month, England’s high street businesses could lose up to 400,000 retail jobs as more people work from home. The lockdowns have seen high street retailers hurt by store closures and a sharp reduction in footfall after the winter coincided with the work from home trend. The UK Treasury is apparently looking at options for an online sales tax in response to the problem as e-commerce has surged during the pandemic.
Tomorrow sees the latest release of the UK’s employment status and analysts expect a loss of -30k jobs, which is better than last month’s -88k loss. The numbers are still dreadful considering the furlough program is ongoing and the Chancellor will likely extend that scheme in the upcoming budget to mask the damage caused by the lockdowns.
Today will also see the release of German IFO business sentiment numbers and last week saw strong PMI figures for manufacturing in the Eurozone’s largest economy. The improvements may have priced in German business strength and that could mean that traders ignore the figure and focus on the speech by Boris Johnson to outline his “roadmap” for reopening the economy.
Hancock and Johnson hint at ‘cautious’ opening
The euro to pound outlook has largely been driven by the UK’s vaccine rollout and the belief was that the economy would reopen ahead of its peers.
Statements last week by the Prime Minister and the country’s Health Secretary Matt Hancock. Johnson was accused last week of “moving the goalposts” as he urged a “data, not dates” approach to the reopening. This would be a blow to the economy’s hard-hit retailers and hospitality businesses, especially as the cases have been dropping and the country has vaccinated the vulnerable age groups in the population.
Hancock said on Sunday that the Prime Minister would offer a “cautious” roadmap for lifting the current lockdown and give an “indicative sense”. The pound sterling could come under pressure if the lockdowns are not released on a quick timescale.