- Pound (GBP) rises ahead of inflation data
- UK unemployment held steady at 4.1%
- Euro (EUR) falls after posting gains yesterday
- Eurozone industrial production data due
The Pound Euro (GBP/EUR) exchange rate is rising, paring losses from the previous session. The pair fell -0.39% on Tuesday, settling at €1.1913 towards the low of the day, and snapping a three-day winning run. At 05:45 UTC, GBP/EUR trades +0.16% at €1.1932
The pound fell versus the euro but gained versus the US dollar yesterday following UK jobs data. The data showed that unemployment remained steady at 4.1% and employers added 108,000 payrolls in January. The data suggested that the UK jobs market was resilient in in the winter despite Omicron spreading quickly. The number of vacancies in the UK also rose to a record 1.298 million.
Wage growth, however, slowed slightly to 3.9% in January, down from 4.2%. Meanwhile inflation is surging higher. The Bank of England expect inflation to reach 7% by spring. This means that disposable incomes are coming under significant pressure, which is bad news for an economy so dependent of the consumer.
Today attention turns to UK inflation data. Analysts expect inflation to hold steady in January at 5.4% year on year. Meanwhile core inflation, which strips out more volatile items such as food or fuel, is expected to tick higher to 4.3% YoY, up from 4.2%.
The euro rose in the previous session after a mixed bag of data and owing to the weaker USD. The US dollar fell as Russia pulled troops away from the Ukraine border, easing tensions in eastern Europe. The Euro trades inversely to the US dollar.
Separately, German ZEW economic sentiment data showed that confidence in the Eurozone’s largest economy rose again in February. The data suggests that financial market specialists expect the economy to continue improving towards the middle of the year.
Looking ahead Eurozone industrial production is due to be released. Analysts expect the slowdown in industrial output to ease slightly, falling -0.5% year on year in January, after falling -1.5% in December.
