• Pound (GBP) boosted by hawkish BoE comments
  • UK unemployment expected to tick lower
  • Euro (EUR) slips on dovish ECB
  • Eurozone GDP & unemployment data due

The Pound Euro (GBP/EUR) exchange rate is edging a few pips lowers after strong gains in the previous session . The pair settled 0.64% higher on Monday at €1.1800, at the high of the day. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1796.

The Pound surged higher in the previous session after hawkish commentary from Bank of England Governor Andrew Bailey. Speaking before the Treasury Select Committee, Andrew Bailey said that he was very uneasy about the inflation situation. He added that the November decision was a very close call and that he risks are much more two sided than they had been.

Andrew Bailey once again highlighted concerns over how the labour market will absorb those workers coming off furlough as a reason key focus for the central bank. So far anecdotal evidence suggests that the end of the furlough scheme has not increased unemployment. However, the BoE has highlighted before that they want to see how the UK labour market holds up before acting.

Today labour market data should shed some light as to how the labour market is holding up in light of the end of the furlough system. Unemployment is expected to head lower to 4.4% in the three months to September, down from 4.5%.

This is the first release in a busy week for UK data with inflation data due tomorrow and retail sales on Friday.

The Euro struggled on Monday falling firmly after European Central Bank President Chriatine Lagarde reiterated her dovish position. The head of the ECB reiterated that conditions for an interest rate hike were very unlikely to be met in 2022.

With the BoE considering hiking interest rates imminently but the ECB pushing back into 2023, the euro is coming under pressure.

Looking ahead there is plenty of economic data for investors to sink their teeth into today with the release of Eurozone employment data and the second reading of the third quarter GDP. Analysts expect GDP to come in at 2.2% quarter on quarter, up from 2.1%. A stronger reading could help boost the Euro.