- Pound (GBP) rises ahead of UK jobs data
- Unemployment is expected to hold steady at 3.5%
- Euro (EUR) slips after gains yesterday
- EZ GDP & German ZEW economic sentiment data due
The Pound Euro (GBP/EUR) exchange rate is rising on Tuesday after losses in the previous session. The pair fell -0.3% yesterday, settling at €1.1387 after trading in a range between €1.1334 – €1.1458. At 05:45 UTC, GBP/EUR trades +0.12% at €1.1401.
The pound is rising amid an upbeat mood in the market and as attention turns to the UK labour market data, which could shed some light on the health of the UK jobs markets ahead of the Autumn Budget. The UK labour market has proved to be particularly resilient, with unemployment remaining at historic lows even as the economy contracted in the third quarter, inflation remained stubbornly high and interest rates rose.
Expectations are for unemployment to stay at 3.5%. Average earnings are expected to tick higher to 6% year on year up from 5.9%. This could unnerve the Bank of England as rising wages suggest that inflation is becoming more entrenched. However, it is also worth noting that wage growth remains below inflation, suggesting that the cost of living crisis is deepening.
Strong jobs data could embolden the BoE to raise interest rates aggressively again in December after hiking by 75 basis points in November. The data comes ahead of inflation figures which are due to be released on Wednesday.
The euro is holding steady ahead of a busy day on the economic calendar. First up with be the eurozone GDP figures, although this is the second reading which tends to be less market moving than the preliminary reading. Expectations are for a confirmation that the eurozone economy grew 0.2% quarter on quarter in the July to September period.
Attention will also be on German ZEW economic sentiment figures, which are expected to show that economic morale improved slightly in November, after falling in October as the ongoing energy crisis hit sentiment. Government support with gas bills is expected to help morale in November.