A German Shot in the Arm for GBPEUR as German Unemployment Figures Disappoint

A look at the wholesale spot markets shows:

• The GBP-EUR is 0.46 pct up on Wednesday night's close at 1.1696.
• EUR-GBP is at 0.8549.

It is important to note that the above are wholesale spot market quotes. Your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please learn more here, or use our live rate vs retail rate converter.

German Unemployment Gives Pound to Euro exchange rate a shot in the arm

Today's rally in GBP/EUR has been sparked by poor employment data out of Germany.

The Unemployment Rate released by the Bundesagentur für Arbeit and published by the German Statistics Office shows that unemployment came in at 6.8 pct - unchanged and in line with analyst forecasts.

However, the Unemployment Change reading - a measure of the change in the number of unemployed people in Germany - came in at +7k, well above expectations for -5k.

UniCredit forecasting declines for Sterling

Nevertheless, we shouldn't count out the Euro just yet, indeed these could be good levels to fade the GBP/EUR rally.

UniCredit today tell clients:

"Remarks by BoE Governor Mark Carney yesterday shook sterling, although he did re-affirm the bank’s forward-guidance framework already announced in mid-August.

"We still favour selling cable into rally on prospects of a return towards 1.50 and buying EUR-GBP on dips as we expect a progressive recovery of this cross rate towards 0.87 and above."

Yet, there is still buying interest for GBP

Where the British Pound is headed next is of course dependent on who you ask.

While UniCredit take a more tempered approach to the Pound, Ipek Ozkardeskaya at Swissquote says that there remains buying interest:

"GBPUSD rallied to 1.5553 and consolidated above the 200-dayMA (1.5510) in Asia. The European opening pulled the cable down to 1.5500, yet traders continue to see buying interest at 1.5480/1.5500."

Geoffrey Yu at UBS has the following to say on GBP/USD:

"The pair is consolidating and with momentum pointing lower, the risk appears to be more weakness to test the strong support at 1.5373. Resistance is at 1.5573 ahead of 1.5718."

Regarding the Euro Pound exchange rate, Yu is backing the Pound:

"Fresh selling pressure materialised from the resistance at 0.8669. With the MACD below its zero line, the risk appears to be for resumption of downside. Support is at 0.85205 ahead of 0.8467."

The decline in the Euro Dollar exchange rate should aid EUR/GBP says Piet Lammens at KBC Markets:

"Global factors will guide trading. The dollar looks to be in better shape across the board. At the same time, the decline in EUR/USD and unwinding of sterling longs are keeping EUR/GBP in a gradual downward trajectory."