- Pound (GBP) awaits UK jobs data
- Brexit talks continue with a constructive tone
- Euro (EUR) looks to ZEW German economic morale data
- Final German inflation is also due
The Pound Euro (GBP/EUR) exchange rate is holding steady on Tuesday after small losses in the previous session. The pair fell -0.12% on Monday settling at €1.1273, after trading in a range between €1.1262 – €1.1304. At 05:45 UTC, GBP/EUR trades -0.04% at €1.1266.
The pound slipped yesterday in quiet trade. With no high impacting UK economic data, attention was on Brexit talks. ICAP still remains between Britain and the European Union and the trade row over Northern Ireland. However, the two sides have agreed to continue with talks as the mood between them continues to improve.
Today attention turns to the UK labor market data. Unemployment is expected to remain steady in the three months to November at 3.7%, around historic lows even as the cost of living crisis continues. A low unemployment rate could mean that the BoE has room for further rate hikes.
Average wage Growth will be under the spotlight, with average earnings expected to rise 6.3% in the three months to November, up from 6.1% in October. While this is not keeping up with the pace of inflation, strong wage growth could unnerve the Bank of England as it feeds expectations of ever-higher wages and inflation becoming embedded in the economy.
The euro edged higher on Monday, boosted by falling gas prices. Gas tumbled over 10%, slumping to a 16-month low as ample supplies overshadow a brief cold spell hitting Europe.
Looking ahead attention today is on ZEW German economic sentiment index for Germany, which is expected to rise to -15 in January, up from -23.5. While this is still in pessimistic territory, it would show a continued improvement.
Today also sees the final release of German inflation for Germany, which is expected to show that consumer prices continued to cool in the eurozone’s largest economy. Should this print confirm the earlier reading then the euro is not likely to react. However, a strong or weaker inflation print could impact the common currency.