GBP/USD: Pound Low vs. Dollar Ahead of US Jobs Report
  • Pound (GBP) rises ahead of jobs data
  • UK unexpectedly fell -0.3% MoM in April
  • Euro (EUR) rose yesterday after hawkish ECB comments
  • German ZEW economic sentiment data due

The Pound Euro (GBP/EUR) exchange rate is rising after steep losses in the previous session. The pair fell -0.45% lower yesterday, settling on Monday at €1.1651, towards the low of the day after trading in a range between €1.1633 – €1.1724. At 05:45 UTC, GBP/EUR trades +0.28% at €1.1683

The pound fell after data raised fears over the health of the UK economy. UK GDP data revealed that the UK economy contracted in April, for a second consecutive month. UK GDP fell -0.3% on a monthly basis in April after falling -0.1% in March.

The fall in GDP was attributed to a large decrease in human health and social work owing to a significant decrease in NHS Test and Trace activity. Meanwhile, supply chain issues hit factories.

The slowdown in GDP comes just days before the Bank of England interest rate decision and has as good as removed any possibility of a 50-basis point rate hike. The central bank is finding itself in a tough position where it could well tip the UK into recession as policymakers attempt to tame inflation.

Today the focus remains on the UK economic calendar with the release of jobs data. Expectations are for the unemployment rate to tick higher to 3.8% in the three months to April, up from 3.7%. Average earnings excluding bonuses are expected to tick lower to 4%, from 4.2%, intensifying the squeeze on households as inflation ticks higher to over 9%.

The euro rose against the pound as investors continued digesting the outcome of last week’s European Central Bank meeting and fresh comments from ECB’s Kazimir.

The Slovakian central bank head Peter Kazimir said that there was a clear need for a 50-basis point rate hike in September in order to get interest rates into positive territory this Autumn.

Today German inflation data is in focus. Expectations are for consumer prices to confirm the record 8.7%, up from 7.8% in April. German ZEW economic sentiment is expected to show a slight improvement in June to -27.5, up from 34.3.