12 Nov 2024

current;-0.82844
target;-0.86788
sl;-0.81000

The EUR/GBP exchange rate strengthens to approximately 0.8295 during the early hours of the European session on Tuesday. The Pound Sterling (GBP) experiences a decline against the Euro (EUR) following the release of mixed labor market data from the UK. Attention is now directed towards the German ZEW survey for November, which is scheduled for later today.

Data published by the Office for National Statistics (ONS) on Tuesday indicated that the UK ILO Unemployment Rate increased to 4.3% for the three months ending in September, up from 4.0% in the previous period. This figure was below the anticipated rate of 4.1%. Additionally, the Claimant Count Change rose by 26.7K in October, compared to a revised figure of 10.1K from the previous month, falling short of the market consensus of 30.5K.

UK wage inflation, as indicated by Average Earnings excluding Bonuses, increased by 4.8% year-on-year for the three months to September, down from 4.9% in August, surpassing the forecast of a 4.7% increase. Average Earnings including Bonuses also saw a rise of 4.3% during the same period, compared to a revised figure of 3.9% (previously 3.8%) for the quarter ending in September. The Pound Sterling faced selling pressure immediately following the release of the UK employment report.

Conversely, European Central Bank (ECB) policymaker Robert Holzmann stated on Sunday that there is no justification for the ECB to refrain from cutting interest rates in December; however, the decision will depend on forthcoming data. The market anticipates that the ECB may implement further rate cuts, which could limit the potential gains for the cross in the short term. Currently, markets have fully accounted for a 25 basis points (bps) rate cut, along with nearly a 20% probability of a more substantial 50 bps reduction.