- Pound (GBP) looks to UK jobs data
- Wage growth is expected to rise 7.1%
- Euro (EUR) rose despite deteriorating investor sentiment
- German ZEW economic sentiment is due
The Pound Euro (GBP/EUR) exchange rate is holding steady after losses yesterday. The pair fell -0.16% in the previous session, settling on Monday at €1.1686 and trading in a range between €1.1646 – €1.1711. At 05:35 UTC, GBP/EUR trades +0.03% at €1.1695.
The pound slipped yesterday in a quiet start to the week amid a lack of high-impacting data. Instead, investors digested comments from Bank of England governor Andrew Bailey.
Attention now turns to the all-important UK employment data, which will be one of the two main releases that the Bank of England will be watching ahead of its meeting in August as it struggles tame inflation.
One of those key releases will be wage growth which is due tomorrow and is expected to remain high at 7.1% in the three months to May, down slightly from the 7.2% increase seen in the three months till June. Meanwhile, average earnings, including bonus is expected to rise to 6.8%, up from 6.5%. Unemployment is expected to hold steady at 3.8%.
Strong growth in wages could fuel hawkish BoE bets. Andrew Bailey has already warned that the UK is in a wage-price spiral. The market is expecting the Bank of England to hike interest rates by a further 150 basis points from its current level to a peak of 6.5%.
Graham edged higher on Monday despite near as investor sentiment pulling by more than expected. The Sentix investor confidence index fell to -22.9, down from -17 marking its worst level in 8 months and the third straight month of declines raising concerns of a prolonged recession in the region.
Attention now turns to the German ZEW economic sentiment index which is expected to deteriorate in July to -10.5, down from -8.5 as recession fears rise. This would point to a worsening of economic sentiment which is already unfavorable.