6th September - Weekly FX Update

GBP/EUR: Monday 9:00 UTC 6th September: 1.16662

The GBP/EUR rate started flat last week, despite Germany experiencing its highest inflation levels in 13 years. This was balanced out with lower German unemployment figures, with jobs now at a pre-virus level as recovery is picking up in Europe's most important economy. There was also a mention of tapering from one of the ECB's policymakers. Looking ahead, politics is back in play this week in the UK. After a Summer of domestic problems piling up, it is reported that the government are poised to raise the National Insurance tax, something which was pledged the PM would not do back in 2019, before Covid-19. Combined with ongoing supply and labour shortages, as well as Delta variant cases still looming, this will certainly make the Pound very sensitive over the coming week.

GBP/USD: Monday 9:00 UTC 6th September: 1.38417

The US jobs report gave the GBP/USD a boost heading in to last weekend, with the Nonfarm Payrolls headline number falling extremely short of the 720k expectation, coming in at a mere 235k. Despite this number being surprisingly low, supporting data was positive and has limited the weakness of the Dollar. The Pound may come under some serious pressure in the near future if the Government decide to hike the UK National Insurance rate to fund social care plans, breaking one of the Conservative's election manifesto pledges. Meanwhile, the UK are still experiencing supply shortages, as well as Delta variant cases, which is making the Pound very susceptible to any negative movements. It is a relatively quiet economic calendar this week, with today being 'Labor Day' in the US.

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