Pound euro (GBP/EUR) strengthens following USD jobs data
(Updated 16:05, 08/08/24) The pound euro (GBP/EUR) exchange rate is climbing higher this afternoon following the release of the latest US employment data.
The latest initial jobless claims report printed notably lower than forecast, with 233,000 newly unemployed US citizens claiming benefits. This fell below market projections of a more modest dip to 240,000 and eased from the previous week’s upwardly revised 250,000.
Joe Brusuelas, Chief Economist for RSM US, commented on X:
‘Big drop in initial jobless claims to 233K. Anything in that range tends to suggest a fairly healthy labour market. Non-seasonally adjusted down to 203K. Large drop in Texas of 7K. This tends to suggest the scepticism that weather played a role in the July jobs report especially around those not at work-both full & part time is warranted’
Following last week’s bleak US employment releases, the upbeat print saw US markets rally. In turn, the euro (EUR) fell against the majority of its rivals, due to its negative trading relationship with a strengthening US dollar (USD).
Elsewhere, the increasingly risk-sensitive pound (GBP) edged higher against some of its safer peers, thanks to an increasingly upbeat market sentiment as the session neared its end.
Looking ahead, could signs of stubborn German inflation see the common currency recoup some of its recent losses?
At the time of writing, GBP/EUR is trading at €1.1650, up approximately 0.4% from this morning’s opening levels.
Original article continues below:
Pound euro (GBP/EUR) exchange rate wavers amid absence of data
The pound euro (GBP/EUR) exchange rate is mixed this morning amid a lack of fresh releases from both the UK and the Eurozone.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1611, virtually unchanged from this morning’s opening rate.
Pound (GBP) muted amid data lull
The pound (GBP) is largely subdued this morning amid a data-light UK calendar.
Elsewhere, ongoing far-right riots across the UK continue to deter investor interest in the pound. A series of racially motivated and violent demonstrations have broken out across the UK this week, dampening hopes of a return to political stability in the UK under Britain’s new Labour government.
While British Prime Minister Keir Starmer has pledged to eradicate such extremist protests, investors remain wary of placing any aggressive bets on the pound as events unfold.
Meanwhile, global growth concerns reinforce market expectation that the Bank of England (BoE) could deliver as many as two more interest rate cuts by December.
As turbulent trading conditions continue to permeate global markets, GBP may struggle to garner investor support as the session progresses.
Euro (EUR) mixed amid data lull
The euro (EUR) is trading without a clear direction this morning amid a lack of fresh Eurozone data.
With data in short supply, a weakened US dollar (USD) provides EUR with modest support, due to the currency pairing’s negative trading relationship.
However, a prevailing risk-on sentiment coupled with ongoing concerns about the health of the Eurozone economy may see the common currency’s upside potential severely limited.
As German industrial data continues to paint a muddled picture of the Eurozone’s largest industrial sector, the bloc’s economic woes persist amid a lack of further releases this morning.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, commented:
‘The widespread belief that the eurozone recovery would accelerate significantly in the second half of the year has not materialised. At the beginning of the year, it seemed that the sector would recover from the recession, but doubts that emerged in June have been exacerbated by a further downturn in July.’
Elsewhere, ongoing market turbulence may serve to stymie EUR movement, leaving the single currency exposed to losses later in the session.
Pound euro exchange rate forecast: German inflation in focus
Looking ahead, Germany’s latest inflation data is due for release on Friday. Economists expect to see a slight uptick in German price pressures, with the index due to print at 2.3% in July, inching higher from a previous reading of 2.2%.
Elsewhere, global risk dynamics may influence movement in the currency pairing, with any bullish trade likely to lift the increasingly risk-sensitive pound against its safer rivals. Alternatively, a spell of gloomy trade could underpin the safe-haven euro.
In the meantime, market-moving US data is due for release this afternoon, with any further signs of a cooling US labour market likely to inject markets with notable volatility once again.