- Pound (GBP) supported by upbeat labour market data
- UK CPI inflation data in focus
- Euro (EUR) rises on USD weakness
- Eurozone industrial production
The Pound Euro (GBP/EUR) exchange rate is treading water on Wednesday after moving lower in the previous session. The pair settled down 0.15% at €1.1697 on Tuesday towards the low of the day. At 08:45 UTC, GBP/EUR trades -0.01% at €1.1696.
The Pound found support in the previous session from upbeat UK labour market data. The number of employees on UK payrolls jumped by 241,000 in August as firms continued the hiring spree amid the reopening. The number of employees on payrolls is now back at pre-pandemic levels. The number of vacancies also rose by 35% to 1 million. Meanwhile unemployment ticked lower to 4.6%.
The strength of the data suggests that the UK labour market is capable of absorbing those still on furlough as the scheme starts to wind down at the end of the month. Consequently, the Bank of England could be more comfortable about moving to hike interest rates sooner rather than later, particularly given that wages rose 8.3% YoY.
Attention will remain on the UK economic calendar today with the release of UK consumer price inflation. Expectations are for CPI to jump to 2.9% year on year, up from 1.9% in July. A higher than forecast read could prompt further speculation that the BoE could look to hike interest rates potentially as soon as early next year.
The Euro advances late in the day on Tuesday as the US Dollar declined. The Euro trades inversely to the greenback. The US Dollar dropped lower on Tuesday following the release of US inflation data, which was softer than forecast.
There was no high impacting Eurozone data released in the previous session. Broadly speaking this week is a quiet week for Eurozone releases.
Today investors will look to the release of Eurozone industrial production which is expected to bounce back in July. Analysts are forecasting a 0.6% month on month rose, after a -0.3% contraction in July.
