- Pound (GBP) edges lower ahead of unemployment figures
- UK GDP rose by less than expected
- Euro (EUR) rises modestly
- German ZEW & CPI data due
The Pound Euro (GBP/EUR) exchange rate is edging lower after three days of small gains. The pair settled +0.04% higher yesterday at €1.1541, after trading in a range between €1.1462 – €1.1565 across the session. At 05:45 UTC, GBP/EUR trades -0.07% at €1.1533.
The pound rose for a third consecutive session yesterday despite less than impressive UK GDP data. The figures from the Office of National Statistics showed that the UK economy rebounded by a less than expected 0.2% month on month in July. This was after a -0.6% contraction in June owing to the Jubilee long bank holiday weekend.
Construction and production fell whilst services grew less than expected and were centred around business-to-business services rather than consumer-facing services. The volatile data means that the BoE is likely to focus on other data points, such as the labour market report, in addition to inflation.
Today sees the release of UK jobs data. Unemployment is expected to hold steady at 3.8% in the three months to July. Meanwhile, the claimant count is expected to fall by 9,200 in August after falling by 10,000 in July.
Meanwhile, average earnings are expected to continue rising, which will be a concern for the Bank of England. Average earnings excluding bonuses are expected to rise 5%, up from 4.7%. Strong wage growth adds to inflationary pressures. The BoE will meet next week to discuss monetary policy.
The euro moved lower versus the pound but rose against the US dollar. The euro has been supported following last week’s European Central Bank meeting where policymakers agreed to hike interest rates by 75 basis points. Since then, ECB officials have sounded committed to hiking rates further.
Today attention is on German inflation data and German ZEW economic sentiment figures, which are expected to show that sentiment deteriorated to -60 in August, down from -55.3 in July. Meanwhile inflation ois expected to confirm the initial reading of 7.9% annually in August, up from 7.5%.