- Pound (GBP) rises for a second day
- UK unemployment held at 4.4% & wages grew 5.6%
- Euro (EUR) falls against the pound and USD
- Trade agreement between EU and US
The Pound-Euro (GBP/EUR) exchange rate is rising on Tuesday for a second straight day. The pair rose 0.9% in the previous session, settling on Monday at €1.1618. It traded between €1.1499 and €1.1631. At 17:00 UTC, GBP/EUR is trading 0.92% higher at €1.1725.
The pound is rising after UK jobs data painted a mixed picture. The unemployment rate held steady at 4.4%. However, businesses shed workers at the fastest pace since the start of the pandemic shortly before they were hit with a sharp rise in payroll taxes.
The data shows that payroll numbers dropped by 78,000 in March before measures from the labour Government’s October budget took effect in April. Meanwhile, vacancies in the first quarter fell below pre-pandemic levels for the first time since 2021.
Meanwhile, wage growth remained solid at 5.9%, excluding bonuses, and 5.6%, including bonuses, painting a mixed picture for the Bank of England as it weighs up when he cut interest rates again.
The market is pricing in a 90% probability that the Bank of England will cut rates by 25 basis points in the May meeting.
The EUR is under pressure against the pound and the US dollar as its recent rally reverses. Where is the other? The European Union and the US have reportedly made little progress in bridging their trade differences this week. As a result, officials from President Trump’s administration indicated that the bulk of US tariffs imposed on the European Union will not be removed.
The EU’s trade chief, Marcos Sefcovic, left the meeting with little clarity on the US stance.
On the data front, ZEW economic sentiment plunged in April to its lowest level since 2022 as concerns over trade tariffs threatened optimism of a robust recovery in the region.
ECB President Christine is due to speak later today, ahead of the ECB rate decision tomorrow.
