The pound euro (GBP/EUR) exchange rate is rising for a second day.
The pound rose after stronger-than-expected wage growth of 5.2%, which resulted in investors reining in BoE rate cut expectations. The growth was up from 4.9% in September and ahead of the 5% forecast.
The market is now fully pricing in only two 25-basis-point rate cuts in 2025. The BoE is expected to leave rates unchanged on Thursday.
The euro is falling after the German IFO business climate deteriorated to its worst level since 2020. The index fell to 84.7 in December from 85.6 in November.
The worsening outlook comes amid worries over trade tariffs and domestic political uncertainty.