- Pound (GBP) rises after steep losses yesterday
- BoE Governor Andrew Bailey will speak tomorrow
- Euro (EUR) is falling on trade tariff worries
- ECB minutes will be released tomorrow
The Pound Euro (GBP/EUR) exchange rate is rising after steep losses yesterday. The pair fell 0.63% in the previous session, settling on Tuesday at €1.1998 and trading in a range between €1.1993 and €1.2083. At 16:00 UTC, GBP/EUR trades 0.17% at €1.2019.
The pound is pushing higher, recovering some of yesterday’s sharp losses. The pound fell sharply yesterday after data showed that the UK labour market was starting to weaken, although wage prices remain sticky. Unemployment rose 4.3%, while vacancies fell, and the number of people on payrolls also declined.
While wage growth cooled to its lowest level in almost two years, it was still stickier than expected, prompting Bank of England chief economist Huw Pill to say that weight growth was still too sticky to continue cutting rates.
The calendar was quiet today. Attention is now turning to Bank of England chief economist Andrew Bailey, who is due to speak tomorrow. The market will be watching for signs that the central bank may consider cutting rates again. Markets are pricing in just a 15% probability of a rate cut in December, with February being a more likely target.
The euro is under pressure once again as it resumes sell-off in the wake of Trump’s victory. Investors are fretting over what potential trade tariffs from Trump could mean for the eurozone economy and its fragile economic recovery. Should growth be knocked off course, the ECB could be forced to cut interest rates more aggressively.
Attention is turning to tomorrow’s GDP data and the minutes from the latest ECB meeting for further clues about whether the ECB will like the coverage by 25 or 50 basis points in December.
