- Pound (GBP) rises modestly, adding to yesterday’s gains
- UK pay growth cools & job vacancies fall
- Euro (EUR) is falling after dovish ECB comments
- German GFK consumer confidence is due tomorrow
The Pound-Euro (GBP/EUR) exchange rate is edging higher for a second straight day. The pair rose 0.37% in the previous session, settling on Tuesday at €1.1725. It traded between €1.1665 and €1.1740. At 10:30, GBP/EUR trades +0.03% at €1.1728.
The pound is finding support from the improved market mood following the Iran-Israel ceasefire. However, gains could be limited amid more signs that the UK labour market is slowing.
Industry surveys published on Wednesday point to below-inflation pay growth and a drop in job vacancies.
Pay settlements offered by private sector employees were 3% in the three months to the end of May, lower than the most recent inflation reading of 3.4% in May. The data suggests employers are adopting a more cautious approach.
Separate data from the recruitment platform Indeed showed a fall in job vacancies, which were down 5% in mid-June and 21% below their pre-pandemic level.
Bank of England policymakers are watching the jobs market closely. Yesterday, David Ramsden warned that there were clear signs of weakening in the labour market and that he was worried that inflation could fall below the central bank’s forecasts.
Bank of England governor Andrew Bailey also spoke yesterday and indicated that rates will likely continue their downward path.
The EUR is holding modestly lower against the pound and the USD following dovish comments from ECB officials.
ECB policymaker Francois Villeroy de Galhau said the central bank could still cut interest rates despite the volatility in the oil market. Meanwhile, ECB chief economist Philip Lane warned that monetary policy would have to take into account not only the most likely path but also risks to activity and inflation.
The eurozone economic calendar is quiet today. Attention will turn to tomorrow’s German GfK consumer confidence survey, which is expected to show improved morale. Several ECB policymakers are also due to speak.
