- Pound (GBP) rises unemployment fell to 4.2%
- Vacancies fell by 43k
- Euro (EUR) falls after PMI data
- ECB President Christine Lagarde is due to speak
The Pound Euro (GBP/EUR) exchange rate is rising after losses in the previous session. The pair fell -0.0% yesterday, settling on Monday at €1.1477 and trading in a range between €1.1458 – €1.1499. At 08:35 UTC, GBP/EUR trades +0.24% at €1.1505.
The pound is pushing higher after stronger-than-expected UK jobs data. The latest figures from the Office of National Statistics showed that the unemployment rate was 4.2% in the three months to August, down from 4.3% in the three months to July and below the 4.3% forecast. The data suggests the labour market is holding up better than expected despite aggressive interest rate hikes from the Bank of England.
It’s worth noting that the ONS said that these figures have been created using a new methodology and should be treated as experimental. They are being derived for the first time from tax records and benefit claims rather than the labour force survey where figures were previously taken from.
While the unemployment rate was better than expected, signs of weakness also appear in the labour market. The number of jobs on offer fell by 43,000 to 988,000 vacancies between July to September.
Meanwhile, UK business activity data was also released, with the composite PMI at 48.6 up from 48.5 in September but below the 48.7 forecast, showing that the economy is likely to experience a downturn in the second half of the year.
Meanwhile, the euro has come under pressure after data shows that the eurozone business activity fell to a three yellow in October. The composite PMI fell to 46.5, down from 47.2, marking its lowest level since November 2020 and excluding the pandemic months, it was the lowest reading since March 2013.
The data suggests that a recession is underway particularly in Germany, Europe’s largest economy, where business activity contracted for a fourth straight month. Meanwhile, German consumer sentiment also fell for a third month in November as households struggled with high food prices and record interest rates.
ECB president Christine Lagarde is due to speak later ahead of the ECB rate decision on Thursday, while the central bank is expected to leave rates unchanged.
