- Pound (GBP) is flat as wage growth slows
- Wages grow at the slowest pace in 3 years
- Euro (EUR) is flat despite more robust German industrial production
- Eurozone investor sentiment improves
The Pound Euro (GBP/EUR) exchange rate is holding steady on Monday after modest losses last week. The pair fell -0.3% in the previous week, settling on Friday at €1.1658 and trading in a range between €1.1644 to €1.1710. At 12:00 UTC, GBP/EUR trades +0.01% at €1.1659.
The pound is struggling to gain ground after softer pay data from recruiters adds to evidence that the UK jobs market is cooling.
According to data from the Recruitment and Employment Confederation (REC), starting salaries for permanent staff rose at the slowest pace in three years in March. Meanwhile, spending on temporary workers dropped to its lowest level in almost four years.
The data points to underlying inflationary pressures in the UK economy easing, which the Bank of England will welcome as policymakers continue their fight to bring inflation back to the 2% target.
The UK inflation rate cooled to 3.4% in February, its lowest level since 2021.
Expectations for a June rate cut have increased in recent weeks amid signs that inflationary pressures are easing.
The euro is failing to benefit from upbeat data. Figures from Germany showed that industrial production rose to a 13-month high in February, signaling an end of stagnation in the first quarter.
Industrial output rose by 2.1%, marking its second consecutive monthly rise, confirming that the sector kicked off the year on a firmer note.
Meanwhile, investor morale in the eurozone also improved for a sixth straight month in April, rising to its highest level in two years. The eurozone Sentix index rose to -5.9 in April, up from -10.5 in March.
The data comes ahead of the ECB’s interest rate decision on Thursday, where the central bank is expected to leave rates on hold at 4% and could signal a June rate cut.
