The UK has officially entered into a recession after the economy contracted by a record 20.4 percent between April and June. The bleak news comes after the Office for National Statistics (ONS) revealed yesterday that almost three quarter of a million jobs had been lost since lockdown began earlier in the year. Data also revealed yesterday that the rate of unemployment remained at 3.9 percent, despite many predicting that it would increase.
Jonathan Athow, deputy national statistician at the ONS, explained hospitality was the worst hit sector, with many bars and restaurants being forced to close during lockdown.
He said: “The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.
“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover.
“Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.
READ MORE: Pound to euro exchange rate: Sterling remains ‘strong’
Speaking exclusively to Express.co.uk, Rehan Ansari, currency expert at Caxton FX shared his insight into the current rate.
He said: “The pound held firm against the single currency yesterday following the better than expected UK unemployment data for June.
“The unemployment rate remained unchanged at 3.9 percent, better than the 4.2 percent that was forecast.
“The weaker components of the data were hourly earnings and the rise in the number of people claiming benefit.”
“This morning’s UK GDP data confirmed that the UK has fallen into recession after posting the largest quarterly decline since the Office of National Statistics (ONS) records began in 1955.
“Despite the large drop, the data is in line with expectations and has therefore had little impact on the GBP/EUR cross.”
George Vessey, UK Currency Strategist at Western Union Business Solutions said that GBP has remained “unfazed” by the latest data.
He said: “The UK labour market numbers have generally been better than expected in recent months and data shows that the unemployment rate remains unchanged at 3.9 percent.
“The claimant count disappointed though, leaping over 94,000 compared to the expected 10,000.
“Sterling is somewhat unfazed by the results though, lingering under $1.31 against the US Dollar and above €1.11 versus the Euro.
“The FX market impact continues to be limited when it comes to the labour market data in the UK, likely because of the government’s intervention with its furlough scheme to help minimise job losses.
“The furlough scheme was still in full operation during June and July, so it won’t be until data for August is released that the consequences of the pandemic on the labour market might start to emerge.
“The Bank of England expects the unemployment rate to soar to 7.5 percent this year after government support schemes are turned off.
“GBP/USD seems to be supported by the $1.30 level, having pulled back from five-month highs near $1.32 earlier this month.
“A breach of this support could expose a sharp slide into the $1.27 territory though.”
The Post Office Travel Money is currently offering rates of €1.0728 for amounts of £400 or more, €1.0884 for amounts of £500 or more, and €1.0940 for £1,000 or more.