- Pound (GBP) fell as wage growth slowed sharply
- BoE rate decision is on Thursday
- Euro (EUR) rises ahead of German ZEW economic sentiment
- The ECB rate decision is on Thursday
The Pound Euro (GBP/EUR) exchange rate is falling for a second day. The pair fell -0.02% in the previous session, settling on Monday at €1.1659 and trading in a range between €1.1641 – €1.1701. At 09:00 UTC, GBP/EUR trades =0.2% at €1.1641.
The pound is falling after the UK jobs data, which painted a mixed picture of the health of the UK labour market.
While unemployment held steady at 4.2%, in line with the forecast, the claimant count was slightly higher than expected at 16,000, and employment increased by a solid 50,000 jobs.
Meanwhile, wage growth was weaker than expected and slowed at the sharpest pace in almost two years.
Average earnings, excluding bonuses, rose 7.3% in the three months leading up to October. This was down from an upwardly revised 7.8% in September and below forecasts of 7.4%
The data suggests that there are some signs that the labor market is cooling, but the data is unlikely to change the BoE’s view that it’s too soon to discuss rate cuts.
The data comes ahead of the BoE’s interest rate decision on Thursday. The central bank is widely expected to leave interest rates on hold as it continues in its fight against inflation, which is still over double the central bank’s target level. In recent speeches, policymakers have pushed back against expectations that the central bank could raise interest rates soon.
Meanwhile, the euro is edging higher ahead of releasing the ZEW German economic sentiment figures. Economists forecast a slight decrease in economic confidence to 8.8 in December, down from 9.8 in November.
While economic confidence doesn’t directly impact the ECB’s interest rate decision, weaker-than-expected sentiment could raise concerns of a recession in the eurozone region, mainly after Q3 GDP showed a contraction, and the latest PMI data has also pointed to a contraction in Q4.
