- Pound (GBP) rises after strong jobs data
- UK unemployment falls to 3.7%
- Euro (EUR) falls after growth forecast is cut
- Eurozone GDP grows 0.3% QoQ
The Pound Euro (GBP/EUR) exchange rate is rising for a fifth straight session. The pair gained 0.13% on Monday, settling at €1.1804 after trading in a range between €1.1716 – €1.1814. At 05:45 UTC, GBP/EUR trades +0.83% at €1.1904.
The pound is on the rise following stronger than expected UK jobs data. The unemployment rate in the UK unexpectedly fell to 3.7% in the three months to March, its lowest level in almost 50 years. Additionally, the number of job vacancies continued to rise to a new record of 1,295,000 and is now greater than the number of unemployed for the first time since record began.
Wages were also under the spotlight with regular wages rising 4.2%, which is still below inflation and fuels the cost of living crisis. Meanwhile, wages including bonuses rose 7% so above inflation in real terms. This suggests that companies are using bonuses to attract and retain talent rather than lifting regular wages
Looking ahead the jobs market is expected to cool as UK growth slows.
The data comes after the Bank of England Governor Andrew Bailey said that he was concerned over the outlook for inflation and particularly worried about rising food prices. However, Andrew Bailey also said that the central bank will take the action needed to bring inflation back under control.
The euro slipped lower yesterday after the European Commission cut its economic growth forecasts for the region to 2.7% in 2022, down from 4% as a result of surging inflation amid the fallout from the Ukraine war.
Today the focus remains on economic growth. The latest Q1 GDP reading showed that the economy grew 0.3% quarter on quarter, up from the preliminary reading of 0.2%. Even so a significant economic slowdown is expected in the coming months as the cost of living crisis curbs consumers spending power.
The data comes as momentum is building in the European Central Bank for a July rate hike.