- Pound (GBP) is rising after three days of losses
- UK unemployment rose to 5.1%, and PMIs recovered in December
- Euro (EUR) is falling after the PMI data
- Services PMI fell to a 3-month low
The Pound-Euro (GBP/EUR) exchange rate is rising after three days of losses. The pair fell -0.09% in the previous session, settling on Monday at €1.1380. It traded between €1.1376 and €1.1406. At 14:00 UTC, GBP/EUR trades +0.15% at €1.14.
The pound is rising as investors digest UK jobs data, which is stronger than expected.
The latest figures from the Office for National Statistics showed that unemployment climbed to 5.1% in the three months through to October, marking its highest level in almost five years. This was up from 5% that was in line with economists’ expectations.
Meanwhile, wage growth excluding bonuses edged down to 4.6% from 4.7% dropping to its lowest level since early 2022, although this was slightly above forecasts. Finally, tax data showed the number of employees on payrolls fell by a larger-than-forecast 38,000. The data indicated a softening labour market as businesses braced for tax increases.
However, the latest PMI data painted a more encouraging picture. Activity in the service sector, the dominant sector of the UK economy, increased in December. The services PMI rose to 52.1 in December, up from 51.3 in November and ahead of the 51.5 forecast. New orders ramped up at the fastest pace in over a year, with the data suggesting that UK firms experienced a post-budget boost following months of speculation.
The euro is falling after business activity unexpectedly declined in December, driven by weakness in both the manufacturing and service sectors.
The composite PMI, widely regarded as a good gauge of business activity, unexpectedly fell to 51.9 in December. This was below expectations of 53, down from 52.8 in November.
The services PMI dropped to 52.6, well below the 53.9 estimated, marking a three-month low. The manufacturing PMI fell at a faster pace to 49.2, signalling concern among manufacturers.
Still, the data is not expected to change the ECB’s outlook, with the central bank expected to leave interest rates unchanged this week.
