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Pound Euro Exchange Rate Falls on Growing Concerns Over the UK’s Jobless Crisis

Published: 8 Jul at 2 PM Tags: Pound Sterling, Euro Exchange Rate, Currency Exchange, Euro Crisis, UK, Exchange Rates, Economy, Inflation, Pound Euro Exchaneg Rate,

The Pound Euro exchange rate fell by -0.8% today as worker shortages and England’s rising unemployment crisis weighs on confidence in the nation’s economy. The pairing is currently fluctuating around €1.16.

GBP suffered following figures from the jobs websites Adzuna and Indeed showing that hospitality, transport, care, and manufacturing sectors had suffered huge hiring challenges.

The Organisation for Economic Co-operation and Development (OECD) commented:

‘As economies roll out their recovery plans in coming months, it is essential to continue supporting families most in need and jobs that remain viable, while providing the right incentives for job creation and resuming work.’

As a result, Pound investors have become more concerned about the outlook for the UK economy. Rising levels unemployment could hold back the nation’s economic recovery in the months ahead.

The Euro (EUR) rose today despite the latest German trade balance figure for May falling below consensus from €15.6 billion to €12.6 billion.

Claus Vistesen, chief Eurozone economist at Pantheon Economics, commented on the statistics:

‘The provisional details across countries show that imports from Poland, the Czech Republic, and Italy increased the most in €B between January and May.

‘We doubt that this shift will prove durable. Imports were up almost 9% between February and May, implying a near-30% annualised rate. That’s not sustainable. More generally, separate data from Eurostat have been volatile and heavily revised, indicating we should take these numbers with a pinch of salt.’

With the outlook improving for the German economy, Euro investors have become more optimistic about Eurozone economy as a whole.

Today also saw Christine Lagarde, the European Central Bank’s (ECB) President, comment that the ECB had changed its inflation target.

Lagarde said:

‘The new strategy is a strong foundation that will guide us in the conduct of monetary policy in the years to come.’

Looking ahead, EUR traders will also eye tomorrow’s speech from Christine Lagarde. Again, any upbeat comments about the outlook for the Eurozone economy would be EUR-positive.

In UK economic data, tomorrow will see the release of May’s GDP data. If this shows signs of a recovering UK economy, then we would see the GBP/EUR exchange rate.