The EUR GBP exchange rate was higher after the latest German inflation figures which showed the lowest unemployment figures since before the virus. The country has seen a surge in hiring since the stages of reopening started in May. An ECB member also talked of the removal of stimulus measures while the eurozone saw a slight uptick in inflation.
The EUR to GBP rate saw highs near the 0.8600 level on the latest developments.
German unemployment drops to pre-virus levels
Germany’s unemployment rate fell to 5.5 percent in August which is the lowest level since the start of the pandemic, according to official statistics on Tuesday.
Seasonally adjusted figures for the economy showed the number of unemployed persons had dropped by 53,000 for the month, the BA federal labour agency said.
The August reading is now the lowest level of joblessness since March of 2020, when unemployment was at a record-low five percent before the coronavirus shutdowns and furlough schemes struck the economy down.
“Unemployment and under-employment have fallen sharply again, even though we’re still in the summer holiday period. Employment growth is gaining momentum,” said BA head Detlef Scheele.
The unemployment rate for the July month was also revised lower to 5.6 percent from 5.7 percent. The country’s economy has been reopening slowly since restrictions were lifted in May, boosting hiring and activity. Supply chain issues affected the economy in the first half but there is hope for a stronger second half.
ECB policymaker talks tapering, inflation higher
The euro was boosted by a rare bout of tapering talk from one of its policymakers, Robert Holzmann.
“We are now in a situation where we can think about how to reduce the pandemic special programs. I think that’s an assessment we share,” Holzmann said.
“At our September meeting, we have the opportunity to discuss how do we close the pandemic part and focus on the inflation part,” he added.
Holzmann also said that the slowdown of the emergency PEPP purchase pace in the fourth quarter was “definitely” a discussion to take place at the central bank’s meeting next week. He also wants the ECB to “disentangle” guidance on asset purchases from the path of future interest rate rises.
His comments came as eurozone inflation surged higher in the bloc. Eurozone inflation was shown to be at a 10-year-high in August with further rises likely, challenging the European Central Bank’s view of transitory price rises.
Consumer inflation in the 19 countries sharing the euro accelerated to 3% this month from 2.2% in July, which was above forecasts for 2.7% and moving well clear of the ECB’s 2% target.
The increase was being fuelled by higher energy, but food prices are also higher with large increases in the prices of industrial goods, according to Eurostat, the EU’s statistics agency.
The latest figures will turn attention to the European Central Bank’s September meeting as policymaker’s have tried to bury their head in the sand over the recent price increases.