Pound euro exchange rate flat following UK jobs data
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of some mid-tier UK labour data.
At the time of writing, GBP/EUR is trading at around €1.1849, virtually unchanged from this morning’s opening levels.
Pound (GBP) undermined ahead of high impact jobs data
The pound (GBP) is dipping against the majority of its peers this morning as disappointing news from audit giant KPMG and the UK’s Recruitment and Employment Confederation (REC) leaves investors hesitant to place any aggressive bets.
Just a day before the publication of the UK’s unemployment rate and average earnings (excluding bonuses) index, the latest UK Report on Jobs confirmed that British employment is easing, undermining Sterling sentiment this morning.
The data marked the lowest reading since March and bolstered Bank of England (BoE) interest rate cut bets, hobbling GBP in the process.
Jon Holt, Chief Executive and Senior Partner of KPMG in the UK explains:
‘Recent Government warnings that the UK’s economy may weaken further before improving add to the overall sense of uncertainty, affecting recruitment plans. The news that while salaries rose last month it was at the weakest rate since March could help make the case for more rate cuts when the [Bank of England’s] Monetary Policy Committee meets to decide the future path of interest rates.’
Euro (EUR) wavers ahead of ECB rate decision
The euro (EUR) is struggling to catch bids this morning as EUR investors brace for this week’s upcoming European Central Bank (ECB) interest rate decision, scheduled for release on Thursday.
As a 25-basis point cut is almost fully priced in, the single currency could remain on the defensive until the central bank reveals its decision.
However, offering the euro some modest support are this morning’s risk off flows. On the back of its nature as a safe-haven currency, today’s cautious trade has seen the euro hold steady against its riskier counterparts.
Pound euro exchange rate forecast: UK jobs data to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking ahead to Tuesday will be the publication of the UK’s latest labour data.
UK unemployment is forecast to fall from 4.2% to 4.1% in July while average earnings (excluding bonuses) are expected to decrease from 5.4% to 4.9%.
Should average earnings fall as expected and point to easing UK wage growth, this could further ramp up BoE rate cut bets and in turn undermine GBP exchange rates.
Turning to the euro, Germany’s finalised inflation reading for August is expected to confirm that inflation in the Eurozone’s largest economy fell below the ECB’s 2% target, and could see EUR exchange rates continue on today’s downward trajectory.