- Pound (GBP) is rising for a third day
- UK jobs data highlighted the BoE’s balancing act
- Euro (EUR) is falling as German inflation stays at target
- The ECB may delay its final rate cut to December
The Pound-Euro (GBP/EUR) exchange rate is rising for a third day. The pair rose 0.01% in the previous session, settling on Tuesday at €1.1565. It traded between €1.1553 and €1.1609. At 10:00, GBP/EUR trades +0.05% at €1.1572.
The pound is edging higher as investors continue to assess UK jobs data. Figures yesterday showed the UK labour market had smaller-than-expected job losses in July, easing some concerns over the health of the economy.
Payrolls fell by 8000, well below the 20,000 forecast, and earlier months were also revised lower, suggesting that the labour market is showing some signs of resilience despite the government’s increased tax burden on employers and the higher minimum wage.
Moody, whilst unemployment held at 4.7% wage growth remains sticky at 5% which could keep inflation above the Bank of England’s 2% inflation target. The data highlights the delicate balancing act that the Bank of England is facing between a softening jobs market and sticky inflation.
Attention will now turn to UK GDP data on Friday, which is expected to show that the economy grew 0.1% in Q2.
The euro is falling following German inflation data, which was confirmed at 2% year on year in July, matching the preliminary reading. This also marks the lowest level since last October and is down considerably from a 14-month high of 2.6% in December.
Delving deeper into the figures, energy prices continued to see a significant drop in July, dropping 3.5% year on year. Meanwhile, services and food prices rose above average increases of 3.1% and 2.2% respectively.
The data comes after the ECB left interest rates unchanged its most recent meeting after cutting rates in 8 consecutive meetings.
The central bank is expected to delay the final rate cut of its current cycle until December, which would give policymakers the luxury of assessing the impact of trade tariffs.
