GBP/EUR: Pound Traders Look To First Ballot In Tory Leadership Contest

The British pound is higher against the euro on Tuesday afternoon after some punchy UK labour market data cast doubt on the possibility of a Bank of England rate cut next week. Survey data out of Germany was also well received, limiting the extent of the euro declines. UK and European stock markets are mostly down but off their lows on reports of a new contagious virus outbreak in China.

GBP/EUR was higher by 39 pips (+0.33%) at 1.1758 with a daily price range of 1.171 to 1.176 as of 1pm GMT, putting the currency pair back toward the top of its 5-day price range.

The pound

Speculation about a possible cut to UK interest rates this year, and possibly as early as this month has put pressure on Sterling in the past two weeks. The suggestion that interest rates could be headed lower was first touted by Bank of England governor Mark Carney and since then other rate-setters have joined the choir. If a decision is reached to cut interest rates at the next January 30 meeting, it will likely happen with a slim majority of votes. As it stands, it seems possible that 5 out of a possible 9 Monetary Policy Members would vote to cut rates. That means every data release before that decision counts.

Hence, the importance of today’s better than forecast unemployment data. UK employment grew by 208,000 in the three months through November with the unemployment rate unchanged at 3.8% according to the UK Office for National Statistics (ONS). Average weekly wages remained at 3.2%, despite expectations for a fall and wages excluding bonuses ran even hotter at 3.4%, down 0.1% from previously.

The euro

After initially turning lower when risk-off sentiment saw Forex traders go in search of the dollar as a haven, the euro stabilised as the day went on. Better economic data from Germany helped generate some of the demand. ZEW survey data showed confidence in Germany picked up in January with so-called ‘economic sentiment’ rising to 26.7 from 10.7 previously. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.