Pound To Euro Exchange Rate Rises As Spain Sheds Record Number Of Jobs

Published: 28 Jul 2020 19:05 GBP to EUR

GBP/EUR

The Pound Sterling Euro (GBP/EUR) exchange rate edged up by around 0.3% on Tuesday, this left the pairing trading at around €1.0978.

Sterling was able to make gains today as the currency was still supported by upbeat comments from the European Union’s chief negotiator, Michel Barnier.

Added to this, GBP was offered further support after a gauge of retail sales hit its highest level in over a year this month.

The data from Confederation of British Industry revealed sales rose as more of Britain’s economy reopened after the coronavirus lockdown.

CBI’s data showed month retail sales balance rose from -37 to +4 in July which boosted the Pound as this was the highest the survey has been since April 2019.

Although, this still only suggests the country will see modest annual growth in retail sales and a survey of 61 retail chains showed they expect a weaker performance next month in August.

Commenting on the latest data, CBI’s chief economist Rain Newton-Smith said:

‘It’s great to see retail sales stabilise this month, but this doesn’t tell the whole story.
‘This crisis has created winners and losers within the retail sector and for some businesses the picture remains bleak.’
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Meanwhile, the single currency retreated from its earlier two-year high against the US Dollar and slumped against the Pound.

The Euro gave up gains as the US Dollar strengthened ahead of the latest US Federal Reserve monetary policy meeting which starts later today.

Meanwhile, data from Spain showed the country shed a record number of jobs in the second quarter of 2020 due to the coronavirus pandemic.

Spain lost one million jobs in the three months to June as the country saw one of Europe’s strictest coronavirus lockdowns hit the tourist-dependent economy. This weighed on the Euro and sent the pairing higher.

The unemployment rate jumped from 14.41% to a two-year high of 15.33%. However, this masked the extent of the crisis as the figure left out people on furlough and those who do not meet the technical jobless criteria.

This weighed on the Euro as Spain’s tourism sector traditionally kicks off in the second quarter and boosts the labour market.

Although, if Spain had not used job protection schemes to limit the number of redundancies, the country would have seen a much higher figure than 1,074,000 job losses over the three months.

Pound Euro Outlook: Will French Consumer Confidence Weigh on EUR?

Looking ahead, the Pound (GBP) could edge higher against the Euro (EUR) as traders focus on the latest round of Brexit negotiations between the UK and European Union.

Sterling will jump if reports suggest talks are progressing well, London is willing to work to break the current deadlock, and Europe is confident that a deal is possible.

Meanwhile, the single currency could suffer losses if the latest French consumer confidence data disappoints markets.

If France’s data shows consumers grew less confident in July after jumping to a three-month high just a month before, it will send the Pound Euro (GBP/EUR) exchange rate higher.

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