- Pound (GBP) looks to UK jobs data
- UK GDP rose by more than expected
- Euro (EUR) awaits German economic sentiment data
- German inflation figures are also due
The Pound Euro (GBP/EUR) exchange rate is falling, paring gains from the previous session. The pair rose 0.12% yesterday, settling at €1.1644 after trading in a range between €1.1602 – €1.1667. At 05:25 UTC, GBP/EUR trades -0.13% at €1.1629.
The pound pushed higher in the previous session after data showed that the UK economy rebounded more firmly than expected in October. The monthly GDP for October rose 0.5%, after contracting -0.6% in September due to the Queen’s funeral. The rebound in economic growth is due to the return to normal working days rather than owing to a fundamental improvement in the UK economy.
The economic outlook for the UK is still gloomy. The economy is expected to fall into recession in the current quarter and remain in recession across the coming year.
Attention today will remain on the UK economic calendar with the release of jobs data. Unemployment is expected to increase to 3.7% in the three months to October, up from 3.6% in September. The number of jobs created fell by 52,000 in August under expected to fall by a further 17,000 in September as signs of the labour market weakening start to appear. Meanwhile, average earnings, including bonuses expected to continue rising two 6.2%, up from 6%. Rising wages will keep pressure on the BoE to raise interest rates aggressively.
The euro drifted higher on Monday in a quiet session with few fundamental drivers. This changes today with a full economic calendar. First up is German inflation, the final reading for November, which is expected to confirm the 10% year-on-year rise in prices, down from 10.4% in October.
German ZEW economic sentiment will also be under the spotlight and is expected to improve from -36.7 in November to -26.4 in December. The current conditions index is also expected to improve to -57, up from -64.5.
The data comes ahead of the ECB meeting on Thursday, where the central bank is expected to raise interest rates by 50 basis points.
