- Pound (GBP) falls after gains last week
- Wage growth is slowing considerably
- Euro (EUR) rises after comments from ECB’s Kazimir
- The ECB signaled a June rate cut
The Pound Euro (GBP/EUR) exchange rate is falling at the start of the week. The pair fell -0.14% in the previous session, settling on Thursday at €1.1751 and trading in a range between €1.1667 and €1.1762. At 14:00 UTC, GBP/EUR trades -0.14% at €1.1734.
The pound is heading lower after last week’s gains as investors digest a UK job survey ahead of tomorrow’s labour market data.
The survey by REC/KPMG Revealed that recruitment firms reported the largest drop in employers’ demand for staff since the pandemic lockdown.
The data also showed that the rate of salary inflation for permanent job placements was almost at a three-year low. The permanent staff salaries index eased to 55.2 in February, down from 55.8 in January after averaging around 60 from 2015 to 2020.
Starting salaries for permanent staff also rose at its weakest level since March 2021.
The data suggests a cooling of wage increases ahead of tomorrow’s closely watched jobs data. Signs that wage growth is slowing considerably could encourage the Bank of England to start cutting interest rates.
The Bank of England has said that it wants to see more evidence that inflationary pressures are receding before cutting interest rates.
Tomorrow, attention will be on the Office of National Statistics jobs data, which is expected to show that unemployment stayed put at 3.8% while average earnings, including bonuses, slipped to 5.7% from 5.8%.
The euro is rising after losses last week when the ECB signaled a June interest rate cut after downwardly revising both growth and inflation forecasts.
Today, the euro is being supported by comments from ECB Slovak governing council member Peter Kazimir, who said that interest rate cuts are coming but not just yet. He warned that the current picture favors keeping interest rates on hold for now before the first rate cut in the summer.
This week is a quiet week as far as economic data is concerned for the eurozone region. The euro is likely to be moved by sentiment.
However,, any gains in the euro could be limited by the view that the ECB will start to cut interest rates ahead of the Bank of England.
