Pound Euro Exchange Rate Trades Narrowly after Above-Forecast UK Jobs Data

March 15, 2022 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Trades Narrowly after Above-Forecast UK Jobs Data

Pound Euro (GBP/EUR) Exchange Rate Rangebound after Above-Forecast UK Jobs Data

The Pound Euro (GBP/EUR) exchange rate is trading within a narrow range today. The Pound (GBP) is climbing higher off the back of better than expected employment data. The Euro (EUR) meanwhile has continued to prosper amid renewed hopes for a peace treaty between Russia & Ukraine.

At time of writing the GBP/EUR exchange rate is at around €1.1882, virtually unchanged from this morning’s opening figures.

Pound (GBP) Climbs as Unemployment Falls Below Pre-Covid Levels

The Pound (GBP) is being boosted today after better than forecast employment day. Additionally, expectations of a rate hike from the Bank of England (BoE) later this week are also helping to boost Sterling.

Figures collected by the Office for National Statistics (ONS) showed UK unemployment falling to below its pre-pandemic rate. The rate fell above forecasts to 3.9% in February, although with job vacancies hitting a fresh record high many analysts were quick to point out a further tightening in the UK’s labour market.

Paul Dales, chief UK economist at Capital Economics, said:


‘The further tightening in the labour market will only encourage the Bank of England to raise interest rates on Thursday despite the coming extra hit to households' real incomes from the war in Ukraine.’

The Pound is likely to continue to climb off the back of rate hike expectations from the BoE amid the possibility of a wage-price spiral. Figures showed average pay including bonuses rose slightly by 0.1% but are likely to offset by soaring inflation.

Euro (EUR) Buoyed amid Hopes of Peace Treaty

The Euro (EUR) is continuing to climb today against many of its competitors today amid prospects of a peaceful resolution to the Russia-Ukraine conflict. Long-term significant gains for the single currency may be limited by prospects of a German recession.

Hopes for a diplomatic solution to the Russian invasion of Ukraine have increased in recent days and helped boost the Euro. Oleksiy Arestovich, an advisor to Ukrainian president Volodymyr Zelenskyy, stated on Monday that he thought the conflict had reached ‘a fork in the road’.

Arestovich went on to say that he though a peace agreement could come as soon as April.

Markets may struggle to focus on these prospects however amid fresh attacks by Russian forces. A series of strikes directed at Kyiv overnight hit multiple residential buildings causing widespread damage. The attacks killed two people.


The Euro’s upward movement may be limited today after German economic sentiment nosedived in March. The ZEW index fell from 54.3 in February to -39.3 in March, its lowest point since the index began in December 1991. The fall was attributed to the Russia-Ukraine conflict and the impact EU sanctions may have on the trading bloc’s largest member.

ZEM President Achim Wambach also warned of the real possibility of a recession for Germany:

‘A recession is becoming more and more likely. The war in Ukraine and the sanctions against Russia are significantly dampening the economic outlook for Germany. The collapsing economic expectations are accompanied by an extreme rise in inflation expectations. The experts therefore expect stagflation in the coming months.’

GBP/EUR Exchange Rate Forecast: Will BoE Hike Rates as Expected?

Looking ahead to rest of the week for Sterling, investors will be focused on the BoE’s interest rate decision on Thursday. Markets have largely priced a rate hike from the central bank although the Pound is likely to climb regardless.

For the Euro, a number of speeches from European Central Bank (ECB) policymakers could prompt movement in the single currency should investors pick up on any hints of future policy. In particular, a speech from ECB President Christine Lagarde on Thursday will be closely watched by investors.

Thursday will also bring the final reading of February’s inflation rate for the Eurozone. The rate is expected to hit fresh highs which could increase speculative bets on EUR ahead of a potential ECB rate hike.

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TAGS: Forecasts