- Pound (GBP) looks to jobs data
- A strong labour market could prompt bets of a rate hike
- Euro (EUR) rose firmly yesterday on Ukraine crisis optimism
- German ZEW economic sentiment data due
The Pound Euro (GBP/EUR) exchange rate is holding steady after two straight days of declines. The pair fell -0.53% in the previous session settling at €1.1882 after reaching a high of €1.1964 earlier in the day. At 05:45 UTC, GBP/EUR trades flat at €1.1882.
The Euro rallied in the previous session on hopes that diplomacy could resolve the Ukraine crisis. Peace talks resumed on Monday after the most upbeat assessment so far, from both sides over the weekend. This bolstered optimism that a solution could be found around the table, even as fighting on the ground continued.
Energy prices eased, partly owing to the news which has helped cool stagflation fears, at least for now. West Texas Intermediate trades back at around $100, after rising to $130 last week.
Looking ahead, Russia, Ukraine talks will remain in focus. Attention will also turn to German ZEW economic sentiment data for March which is expected to a sharp drop in sentiment as Russia invades Ukraine. The economic sentiment index is expected to drop from 54.1 to 10 while the current situation index is forecast to tumble to -22.5, from -8.1.
ECB president Christine Lagarde is expected to speak later in the session.
The pound struggled against the strong euro and the US dollar in the previous session amid concerns ahead of the BoE interest rate decision on Thursday. Fears are growing that another rate hike by the BoE in the face of slowing growth, could accelerate the path to stagflation.
Today the focus will be on the UK jobs market. Data is expected to show that he unemployment rate in the UK dropped to 4% in the three months to January, down from 4.1%. Meanwhile, average earnings including bonuses are expected to rise to 4.6%, up from 4.3% creating more inflationary pressure. A strong jobs market could add to the reasons why the BoE will hike interest rates.