- Pound (GBP) is rising after losses yesterday
- UK vacancies fell to a 5-month low
- Euro (EUR) is falling against the pound and the USD
- German ZEW economic sentiment falls to the lowest level since 2022
The Pound-Euro (GBP/EUR) exchange rate is rising modestly after losses yesterday. The pair fell 0.07% in the previous session, settling on Monday at €1.1482. The pair traded between €1.1471 and €1.1504. At 15:30 UTC on Monday, GBP/EUR trades 0.04% at €1.1487.
The pound is edging higher despite signs that UK employers turned more cautious following the start of the Iran conflict.
Data showed that vacancies fell to an almost five-year low in March, dropping by 29,000 over the three months to March.
While the unemployment rate unexpectedly declined to 4.9% from 5.2%, this was due to rising economic inactivity—meaning more people are neither in work nor actively seeking employment—rather than a meaningful increase in hiring.
Furthermore, the labour market continues to show an ongoing decline in PAYE company payrolls.
Taken together, this backdrop is not conducive to strong wage growth. In fact, private sector pay growth was around 3.3%, which is consistent with a 2% inflation target at the Bank of England. However, with headline inflation expected to rise above 4% by Q3, real wages are likely to fall, putting pressure on economic growth.
Attention is now turning to CPI data due tomorrow, which is expected to show a 3.3% year-on-year rise in March, up from 3% in February.
The euro is edging lower against the pound and is also falling versus the US dollar, partly dragged down by weaker-than-expected German ZEW economic sentiment figures.
German economic sentiment fell sharply in April, plunging to -17.2 from -0.5, coming in well below the -6.7 expected and marking the lowest level since late 2022.
The deterioration in sentiment comes amid rising energy costs due to the Iran war, as businesses grow increasingly concerned about long-term shortages in energy supply, discouraging investment.
Looking ahead, attention will turn to tomorrow’s consumer confidence figures for April.
