The UK unemployment rate unexpectedly fell for the second month in a row yesterday morning, falling from 5% to 4.9%. This data was taken from the 3 months from December to February, months which had been mostly spent in tight COVID-19 lockdown restrictions, hence why economist’s polls had predicted a slight jump to 5.1%.

The Government’s current Furlough scheme was extended in March to September. To put this into perspective and considering that one in five employees in the UK remain on Furlough, without this scheme it has been forecast a year ago that the jobless rate could have been as high as 10%.

The UK’s tax office however showed that the number of employees on company payrolls had fallen by 56,000 in the same period, which was the first decline in four months. This has meant that the total number of jobs which have been lost since the beginning of the pandemic has now risen to 813,000, and over half of these job losses were held by those under 25, predominantly in the hospitality sector. However, positive signals have been taken from the outdoor hospitality sector reopening from last week, as there had been a noticeable rise in new job vacancies in March.

Global trade

UK Government Waives Some Export Permits

The UK announced yesterday that export vehicles travelling from the UK to the European Union would no longer need a particular permit to enter the port region, easing controls which had been initially designed to prevent the backlog of lorries as witnessed at the end of last year. The easing of rules suggests that the new requirements had been adapted to, proving that transport companies had been arriving at the border already prepared. The UK Government said that export volumes between Britain and the European Union were now operating at normal levels, with data showing an increase in exports of 46% in February.

There will be a host of UK economic data released tomorrow morning, which could bring further volatility for the pound. Consumer Price Index, a measure of inflation, will show Month on Month and Year on Year figures for March. MoM is expected to rise from 0.1% to 0.3%. and YoY from 0.4% to 0.8%. If these figures are positive as expected, or exceed expectations, we could see another rebound for sterling.

France Trials Coronavirus Travel Certificate, Could This Strengthen Euro Rates

France has been announced as the first EU member state to start trialling a new digital Coronavirus travel certificate, implemented by Brussels in the hope that people will be able to travel more freely in Europe by the Summer if preliminary trials are successful. The App, TousAntiCovid, is similar to the UK’s NHS test and trace app, but has now been upgraded to store negative test results on mobile phones. The trial will be extended from 29th April to then include certificates of vaccinations, which could then be used for events such as concerts and festivals, but not likely to be used for bars and restaurants. Until recently, Europe’s slow uptake of the Covid-19 vaccination programme had been a large contributing factor to euro weakness. However, if trials go according to plan, this could cause significant EUR strength if it helps its economy to get back on track through the tourism and hospitality sectors. 

The European Central Bank will announce its latest interest rate decision on Thursday, with expectation for rates to remain on hold at 0%. The ECB will hold its Monetary Policy Statement and press conference following this announcement, which could provide some hints to future policy changes. Events such as this have the capacity to create swings on the currency in question, therefore clients with an upcoming transfer involving the euro may wish to speak to their account manager ahead of this release.

$3 Trillion to be Spent on Covid Recovery

US Unemployment Data Release This Week

Over the last 8 weeks, over 26 million US citizens have become unemployed, with many of them being contract workers or lower paid with limited resources, after most non-essential businesses having been closed. This Thursday will see the release of the latest unemployment rate, which is expected to rise by 3.5 million more people, bringing the total to 30 million workers, or 18% of all workers, unemployed. Retail Sales figures have also fallen by 8.7% in March which was the largest fall on record, as consumer spending was curbed significantly in line with loss of wages and unemployment.  Durable goods orders also fell by 14.4%, much of which caused by car dealerships being closed across the US.

As a result, the FED’s chosen course of action over the next quarter will be keenly watched by investors hoping for some positive signals. Clients with US dollar requirements in the short to medium term future could benefit from outlining those requirements to their account manager here, so that we can help to plan around this key event.

With few major US data releases of note this week, investors are drawing their attention to the US Federal Reserve Interest Rate decision scheduled for Wednesday next week. The Federal Reserve are expected to use its April meeting to assess the state of the US economy, aiming to outline its message of determination and offer some hope for the months ahead.

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