- Pound (GBP) edges lower after yesterday’s gains
- Unemployment to hold steady at 3.7%
- Euro (EUR) supported by hawkish ECB bets
- German ZEW economic sentiment data due
The Pound Euro (GBP/EUR) exchange rate is falling after gains in the previous session. The pair rose +0.32% yesterday, settling on Monday at €1.1326, after trading in a range between €1.1280 – €1.1336. At 05:45 UTC, GBP/EUR trades +0.1% at €1.1322.
The pound is holding steady ahead of the release of UK labour market data from the Office of National Statistics. The data could help shed more light on the Bank of England’s next move. Expectations are for the unemployment rate to remain unchanged at 3.7%, for the three months to February. Meanwhile, 50,000 jobs are expected to be added, and the claimant count is expected to fall by 11.8k, after falling 11.2k in February.
Much attention will be on wage growth which has remained high and keeps pressure on the BoE to keep hiking interest rates. Average weekly earnings, including bonuses, are expected to ease to 5.1% YoY in February, down from 5.7%. Average earnings, excluding bonuses are expected to ease to 6.2% from 6.5%.
The data comes ahead of inflation data later in the week and as the BoE could hike rates by a further 25 basis points in May, although the decision still looks to be a coin toss.
The euro is holding steady with all eyes on the German ZEW economic sentiment which is expected to improve further in April to 15.3, up from 13 as morale continues its recovery path.
The euro has been broadly supported by the idea that the ECB still has work to do raising interest rates to rein in inflation. The ECB will almost certainly announce a 25 basis point rate hike in May, although some policymakers still see an argument for a 50 basis point hike.
ECB policymaker Martins Kazaks said “The central bank has the option of a 25 or 50 basis point move.
