GBP/EUR: UK & Eurozone Inflation to Drive Pound vs. Euro
  • Pound (GBP) fell after mixed jobs data yesterday
  • UK CPI is expected to rise to 10.2%
  • Euro (EUR) rises modestly despite deteriorating German investor sentiment
  • Eurozone industrial production data is due

The Pound Euro (GBP/EUR) exchange rate is holding steady after losses yesterday. The pair settled -0.14% lower yesterday at €1.1523, after trading in a range between €1.1464 – €1.1565 across the session. At 05:45 UTC, GBP/EUR trades +0.01% at €1.1524.

The pound came under pressure yesterday after a mixed jobs market report. While the unemployment rate fell to a 48-year low, this was due to people leaving the workforce, which then puts upward pressure on wages, which will be a concern for the BoE when they meet next week. UK wage growth excluding bonuses was 5.2%, well up from 4.8% previously.

Meanwhile, demand for workers was starting to show some signs of weakness, with vacancies at the lowest level since the summer of 2020, in the depths of the pandemic. Employment was also softer, with 40,000 jobs added below the 120,000 forecast.

Today the UK economic calendar will remain in focus as inflation data is due to be released. UK inflation is expected to tick higher to 10.2% year on year in August, up from 10.1% in July. The BoE have said that they expect inflation to rise to 13% in the coming months, and they expect the UK to fall into recession in the final three months of the year.

The euro rose in the previous session, despite terrible German investor confidence. The closely watched ZEW German investor sentiment data plunged to -61.9, down from -55.3. This was a larger fall than analysts were expecting as fears over the country’s energy supplies grew.

Separately data showed that Spanish inflation reached 10.5% YoY in August, and German inflation was confirmed at 8.8%.

Today eurozone industrial output figures will be in focus and are expected to show a 1% contraction month on month. In addition to a speech by ECB President Christine Lagarde. The President of the European Union, Ursula der von Leyen is also due to speak.