- Pound (GBP) is falling for a third day
- UK unemployment rose to 4.6% and wage growth dropped to 5.2%
- Euro (EUR) rises for a third day
- Eurozone Sentix confidence improved considerably
The Pound-Euro (GBP/EUR) exchange rate is falling for a third straight day. The pair fell by 0.04% in the previous session, settling on Monday at €1.1863. It traded between €1.1858 and €1.1887. At 09:30, GBP/EUR trades -0.25% at €1.1834.
The pound is falling sharply after UK jobs data was weaker than expected. Data from the Office for National Statistics showed that unemployment rose to its highest level in almost four years, and wage growth dropped by more than expected, potentially paving the way for further BoE rate cuts.
Unemployment rose to 4.6% in the three months to April, up from 4.5%, marking its highest level since May 2021. Meanwhile, pay growth slowed to 5.2% in the three months to April, the lowest level since Q3 of last year. Adding to the week, the number of payrolled employees in May fell by 109,000, significantly more than estimated, marking the fourth straight drop and the largest since May 2020.
The weak labour market data comes amid a shakeout from April’s increase in employer National Insurance tax burden and the rise in minimum wage.
Signs of the UK labour market weakening could lead to the Bank of England adopting a less careful and gradual approach to cutting interest rates.
The euro is rising against the pound and the US dollar after eurozone investor confidence jumped sharply higher in June. The eurozone Senix investor confidence gauge rose to 0.2, up from -8.1 previously. This was well ahead of the -6 that was expected.
Delving deeper into the figures, Germany was a notable strong improver. The sentiment index for Germany was still negative at -5.9, but it was still the highest reading since March 2022. Despite Trump’s tariffs, concerns appeared to be slowly subsiding.
