- Pound (GBP) is rising after losses yesterday
- UK unemployment fell to 4.2%
- Euro (EUR) falls after German economic sentiment plummets
- Eurozone GDP data is due tomorrow
The Pound Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair fell 0.08% in the previous session, settling on Monday at €1.1687 and trading in a range between €1.1671 and €1.1704. At 14:00 UTC, GBP/EUR trades +0.25% at €1.1706.
The pound is pushing higher as investors digest mixed jobs data.
Unemployment in the UK unexpectedly fell to 4.2% in the three months to the end of June, down from 4.4 percent in the previous quarter.
Meanwhile, wage growth rose at an annual rate of 5.4%, the weakest level for around two years, according to data from the Office of National Statistics. This was down from 5.7% in the previous reading but was also well ahead of the expected 4.6%. However, average earnings, including bonuses, cooled to 4.5%, down from 5.7%.
The data suggests that there are signs that the job market is cooling, Although the stickier-than-expected wage growth will be a point of concern for some policymakers.
Yesterday, Bank of England hawk Catherine Mann had warned that wage growth could remain strong for years to come.
Looking ahead, attention will now turn to UK inflation data due tomorrow. The data is expected to show that the consumer price index rose to 2.3% year over year, up from 2% in June.
The Bank of England cut interest rates to 5% from 5.25% earlier this month marking its first rate cut in more than four years.
Meanwhile, the euro was falling after German economic sentiment plunged in August. German ZEW economic sentiment fell dramatically to 19.2 in August, down from 41.8 in July.
This drop marked the largest decline in sentiment since July 2022 and reflects growing pessimism over the country’s outlook.
Economic sentiment likely deteriorated amid uncertainty surrounding ambiguous monetary policy, disappointing US business data, and growing concerns of an escalation in conflict in the Middle East.
Looking ahead, tomorrow sees the release of eurozone GDP data, which is expected to confirm growth of 0.3% quarter on quarter.
