GBP/EUR Exchange Rate Steady Following UK Employment Figures
The Pound to Euro (GBP/EUR) exchange rate is holding its ground this morning as markets welcome the publication of the UK’s latest employment report.
At the time of writing the GBP/EUR exchange rate is trading at around €1.0772, almost unchanged from this morning’s opening rate.
Pound (GBP) Stable as UK Wage Growth Impresses
The Pound (GBP) is trading robustly this morning, with GBP investors cheering as wages in the UK rose at their fastest pace in 11-years.
According to data published by the Office for National Statistics (ONS), wage growth (excluding bonuses) shot up from 3.6% to 3.9% in June, beating expectations of a slightly more modest rise of 3.8%.
However, the accompanying employment figures weren’t quite so positive, as they revealed a surprise rise in the UK unemployment rate at the end of the third quarter.
UK wage growth picks up to 11-year high https://t.co/4tr8ru3rkR
— BBC News (UK) (@BBCNews) August 13, 2019
Fortunately for GBP investors, markets were willing to overlook this modest rise in unemployment amidst optimism that robust wage growth and resulting increase in consumer spending power should help to prop up economic growth.
Ian Stewart, chief economist at Deloitte said:
‘The days of sharply falling unemployment are behind us, but a tight labour market points to further gains in wages and spending power. Despite a second quarter decline in growth, the UK economy still has momentum.’
Euro (EUR) Subdued as Eurozone Sentiment Plummets
At the same time, the Euro (EUR) is struggling to find momentum this morning, following the publication of the Eurozone’s latest economic sentiment index.
The index, published by ZEW, indicates that economic sentiment within the bloc is growing increasingly gloomy, particularly in Germany.
ZEW President Professor Achim Wambach said:
‘The ZEW Indicator of Economic Sentiment points to a significant deterioration in the outlook for the German economy.
‘The most recent escalation in the trade dispute between the US and China, the risk of competitive devaluations, and the increased likelihood of a no-deal Brexit place additional pressure on the already weak economic growth.’
GBP/EUR Exchange Rate Forecast: Contraction in German GDP to Drive Euro Losses?
Looking ahead, we may see the Pound to Euro (GBP/EUR) exchange rate race higher in the mid-week following the publication of Germany’s latest GDP figures.
After enjoying 10 years of solid growth, there are signs that Germany’s economy is beginning to run out of steam as the malaise within the country’s manufacturing sector begins to spread to other parts of the economy.
As a result economists are forecasting German economic growth contracted in the second quarter, an outcome which is likely to weigh heavily on the single currency as it fuels concerns that the Eurozone’s largest economy could fall into a contraction this year.
Meanwhile, the focus for GBP investors tomorrow will be on the release of the UK’s latest CPI figures as analysts predict domestic inflation will have slowed in July.