- Pound (GBP) rallies after upbeat jobs data
- UK CPI expected to rise to 3.9%
- Euro (EUR) falls on central bank divergence
- Eurozone inflation data due
The Pound Euro (GBP/EUR) exchange rate is moving higher on Wednesday for the 5th straight session. The pair settled 0.49% higher on Monday at €1.1858, towards the high of the day. At 05:45 UTC, GBP/EUR trades +0.19% at €1.1880.
The Pound surged higher on Tuesday after UK jobs data revealed that that number of staff of payrolls was above the level pre-COVID in October. The number of claimants also fell by 14.9,000. Adding to the good news the unemployment rate ticked lower in the three months to September.
The data will have calmed nerves at the Bank of England after the Governor Andrew Bailey said that policy makers want to see how the labour market reacts to the ending of the furlough scheme at the end of September. So far, the data suggests that those coming off furlough have been absorbed by the jobs market – a sign of the resilience of the labour market.
Attention will now turn to the UK inflation data, as measured by the consumer price index. Analysts expect CPI to jump to 3.9% year on year in August, up from 3.1% in September. This would be almost double the BoE’s target 2%. A stronger than forecast reading combined with the upbeat labour market data could boost expectations of a rate rise in December.
The Euro trades under pressures, thanks in part to the surging US Dollar. The euro trades inversely to the greenback so US Dollar strength is bad news for the common currency.
The Euro also trades under pressure as the European Central Bank appear to be sticking to their more dovish tone, even as other central banks such as the BoE and the Fed sound more hawkish.
Database, Eurozone GDPA came in as expected, confirming the initial reading of 2.2% growth in the third quarter.
Eurozone inflation is also due to be released. Expectations are for CPI to rise to 4.1% in October, up from 3.4%.