- Pound (GBP) is rising for a sixth straight day
- UK unemployment rose 4.5%
- Euro (EUR) falls despite upbeat data
- German ZEW economic sentiment rises sharply in May
The Pound-Euro (GBP/EUR) exchange rate is rising for a sixth straight session. The pair rose 0.14% in the previous session, settling on Monday at €1.1876. It traded between €1.1867 and €1.1900. At 21:30, GBP/EUR trades 0.14% at €1.1865.
The pound is rising for a sixth straight day despite mixed UK jobs data. The latest data from the Office for National Statistics showed that the unemployment rate in the UK rose to its highest level in almost four years. UK unemployment rose to 4.5% in the first three months of this year, up from 4.4% previously. Meanwhile, the number of vacancies in the economy fell by 5.3%.
Wage growth also weakened, with regular earnings rising 5.6% in the three months to March, down from 5.9%, although this still remains high by historic standards. The Bank of England is watching wage growth closely, as strong wage growth is intrinsically linked to sticky service sector inflation.
The Bank of England has said that high wages are an obstacle to more aggressive rate cuts.
The BoE cut rates by 25 basis points last week.
The euro is falling despite data showing that economic morale improved in Germany in May. ZEW German economic sentiment rebounded to 25.2 in May, well ahead of the 11.9 expected and up significantly from negative 14 in April.
Easing trade tensions, a new German government, and stabilising inflation helped a recovery.
However, the current conditions subcomponent remains deeply negative, falling further to -81.2, suggesting that the near-term morale remains fragile.
The data comes after the ECB cut interest rates by 25 basis points last month and is expected to continue cutting interest rates again in the June meeting. Inflation in the region is back to target, and policymakers are keen to support stagnant growth in the region.