Weak UK Unemployment Data Does Not Hold Back GBP EUR Exchange Rate

February 16, 2012 - Written by David Woodsmith

STORY LINK Weak UK Unemployment Data Does Not Hold Back GBP EUR Exchange Rate

The Pound to Euro exchange rate (GBP EUR) is 1.2060.

The euro came under considerable selling pressure during yesterday afternoon’s European session, following widespread reports which suggested that eurozone Finance Ministers are considering withholding part of the next €130bn of bail-out funding which the troubled Hellenic state needs in order to meet next month’s debt repayments.

The rumours stated that the eurogroup remains unconvinced about Greek policy-makers’ commitment to the bail-out package which was passed in Greece’s parliament last on Sunday night. These whispers stoked a run against the euro leading up to yesterday afternoon’s European close, which saw the GBP EUR exchange rate climb to 1.2062 last night – its highest level since February 7th.

Meanwhile, there was renewed cause for concern for investors holding Sterling-denominated assets, as official government figures showed that British unemployment had reached 8.4% by the end of last year. In the three months leading up to this date, overall unemployment rose by 48,000 , some 22,000 of which were 16-24 year-olds.

The Bank of England’s Quarterly Inflation report, which was followed hot on the heels of the unemployment numbers, provided room for limited optimism, predicting that Britain would avoid slipping into another recession this year. However, it was not all good news from the Bank, as the report also stated that the UK economy would suffer short bouts of negative growth.

Elsewhere, there was a significant amount of data released in the US yesterday afternoon. The tone of the majority of the releases was weak, with January’s Industrial Production figure for January, which showed that there had been no monthly growth in this key sector, providing a real low-light. The weak data from the world’s leading economy saw the Dollar supported late on yesterday, sending the GBP USD exchange rate down to 1.5660 overnight.

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