- Pound (GBP) looks to unemployment data
- BoE could raise rates sooner than expected
- Euro (EUR) picked up of two month low
- German & EZ ZEW economic sentiment data due
The Pound Euro (GBP/EUR) exchange rate is ticking a few pips lower after closing mildly lower in the previous session. The pair settled -0.05% lower on Monday at €1.1768 after briefly rising above €1.1800 a two month high earlier in the session. At 05:45 UTC, GBP/EUR trades -0.03% at €1.1765.
The Pound was well supported in early trade on Monday after Bank of England policy maker Michael Saunders said that the central bank could move earlier than initially anticipated rising interest rates. His comments come amid concerns that inflation could remain elevated for longer as energy prices keep on climbing.
Oil prices surged higher on Monday hitting fresh seven-year highs before cooling slightly. Higher energy costs, in addition to supply chain disruptions and rising labour costs are raising inflationary pressures.
Whilst the economic calendar was quiet last week, that is set to change today with the release of ILO unemployment data. Expectations are for the unemployment rate to tick lower to 4.5% in the three months to August, down from 4.6%. After 183,000 jobs were added in June, expectations are for 243,000 jobs to be added in July. This would suggest that the labour market recovery is still going from strength to strength.
However, the furlough scheme only wound down at the end of last month so will not be evident in these figures. Still with over 1 million vaccines in the UK, it would appear that the UK jobs market can absorb the additional workers released.
The Euro picked up from two month lows in the previous session as the broad mood in the market improved and despite the European Central Bank’s Lane seeming reluctant to act to battle against inflation.
Looking ahead investors will be looking towards the release of ZEW economic sentiment data for both the Eurozone and for Germany. Economic sentiment is expected to decline in October in Germany, falling from to 24 down from 26.5. However, sentiment is expected to pick up in October to 37, up from 31.1.
