- Pound (GBP) is falling after two days of losses
- UK businesses have had the weakest hiring intentions since 2020
- Euro (EUR) rises despite unemployment rising
- ECB’S Kazak said the uncertainty in the outlook remains high
The Pound-Euro (GBP/EUR) exchange rate is falling, snapping a two-day winning run. The pair rose 0.27% in the previous session, settling on Wednesday at €1.1490. It traded between €1.1437 and €1.1515. At 17:00 UTC, GBP/EUR trades -0.14% at €1.1474
The pound is under pressure once again on Thursday as investors worry about the outlook for the UK economy.
According to a monthly survey by the Bank of England, businesses in the UK have the weakest hiring intentions since the pandemic and also expect the fastest inflation since 2024.
Tax data has also shown a declining number of employees over the past seven months, while the unemployment rate has risen to 4.7%, marking its highest level since 2021.
Bank of England policymakers are hoping that the weaker jobs market will reduce wage growth and help bring down inflation, which hit 4% year-on-year in September, double the central bank’s 2% target.
Meanwhile, Deputy Governor of the Bank of England, Sarah Breeden, warned that inflation is too high and the central bank will need to steer a difficult course to bring it down without triggering a painful downturn in the jobs market.
These warnings and figures come as the markets are already nervous about what the Chancellor’s November budget might bring. The Chancellor is expected to raise taxes again, which could further slow the UK’s stagnant growth.
The euro is heading higher against the weaker pound, even after eurozone unemployment unexpectedly rose.
Data today showed that eurozone unemployment came in at 6.3% up from 6.2% previously and ahead of the 6.2% that was expected. This tick higher could be showing early signs of cooling in the labour market after months of resilience, which could add to concerns over sluggish growth in the second half of the year.
Meanwhile, European Central Bank policymaker Kazak said the uncertainty in the outlook remains high. He added that he considered the current interest rate level to be very appropriate and could stay unchanged if there were no further shocks.
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