Select Language

EUR/GBP bounces after UK Unemployment data miss, but Euro remains vulnerable

Breaking news

EUR/GBP bounces after UK Unemployment data miss, but Euro remains vulnerable

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.11.13 22:43
EUR/GBP bounces after UK Unemployment data miss, but Euro remains vulnerable

update 2024.11.13 22:43

  • EUR/GBP bounced from multi-year lows after weak UK labor market data led to a sell-off in the Pound. 
  • The pair remains pressured, however, by risks to the outlook for the Eurozone as the US gears up to implement tariffs. 
  • Political uncertainty in Germany and the Pound's positive relationship to risk are further bearish factors for EUR/GBP. 

EUR/GBP bounces off two-and-a-half year lows in the 0.8200s to trade back up in the 0.8330s on Wednesday after UK labor market data showed a rise in the Unemployment Rate which increased speculation the Bank of England (BoE) might cut interest rates in December. 

Previously the UK central bank had been one of the few major central banks expected not to cut rates at the end of the year because of stubbornly high inflation. The expectation of interest rates remaining relatively elevated in the UK had been a supportive factor for the Pound Sterling (GBP), since they attract greater inflows of foreign capital. 

The UK Unemployment Rate rose to 4.3% in the three months to September from 4.0% in the previous period, according to data from the Office of National Statistics (ONS), released on Wednesday. The reading was also well above economists' expectations of 4.1%. It indicated a weakening labor market and could put pressure on the BoE to cut interest rates in order to stimulate borrowing, growth and job creation.  

That said, other UK employment data was not as poor suggesting the Pound Sterling (GBP) could recover and EUR/GBP upside is likely to remain capped. UK Average Earnings Including Bonus' increased 4.3% from a revised up 3.9% previously and 3.9% expected. UK Average Earnings Excluding Bonus' rose by 4.8%, beating estimates of 4.7%, though below the 4.9% previously. The higher wages suggest inflationary pressures might increase, forcing the BoE to keep interest rates at their current elevated level, thereby strengthening Sterling, with bearish implications for EUR/GBP. 

The Euro (EUR) also remains vulnerable due to growth concerns, the political crisis in Germany and fear of the US imposing tariffs on European imports, further weighing on the pair. President-elect Donald Trump warned he would make the Eurozone "pay a big price" for not buying enough American-made goods, which suggests he is working up to slapping tariffs on Euro Area imports. The imposition of tariffs has led economists to downgrade their forecasts for Eurozone Gross Domestic Product (GDP) by "a minimum of 0.3pp cumulative over 2025-26" according to Japanese lender Nomura.  

The Single Currency is feeling the pressure from political uncertainty in Germany after the collapse of Chancellor Olaf Scholz's governing coalition. The country is set to hold snap elections on February 23, 2025, however, until then Germany's political problems will probably be a continued source of risk for the Euro, and a downside risk to EUR/GBP. 

According to analysts at Goldman Sachs, the Pound is more resilient to the geopolitical shocks compared to the Euro and this is bearish for the pair. GBP is also more positively aligned to risk-on and has a "positive beta to global risk". Should US equities continue to rally as a result of the outlook due to the new administration in Washington, this should further support Sterling, suggesting downside pressure for EUR/GBP which could even revisit its over-two-year lows. 



 


Date

Created

 : 2024.11.13

Update

Last updated

 : 2024.11.13

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

USD/CHF Price Forecast: Resumes uptrend after pullback

USD/CHF is striking higher again after a brief pullback from overbought levels.
New
update2024.11.22 23:27

NZD/USD Price Analysis: More downside looks likely towards 0.5770

The NZD/USD pair rebounds slightly after posting a fresh yearly low near 0.5820 in the North American session on Friday.
New
update2024.11.22 23:24

USD/JPY edges lower after stronger-than-expected Japanese inflation, stimulus package

USD/JPY is trading a touch lower in the 154.30s on Friday as the Japanese Yen (JPY) strengthens against the US Dollar (USD) due to the release of higher-than-expected Japanese macroeconomic data, and Tokyo's announcement of a $250 billion economic stimulus package.
New
update2024.11.22 23:01

USD/CAD turns upside down on steady Canadian Retail Sales growth, US Dollar retraces

The USD/CAD pair surrenders its entire intraday gains and ticks down as the Canadian Retail Sales data grew steadily in September and the US Dollar (USD) gives up a majority of its intraday gains after refreshing a two-year high.
New
update2024.11.22 22:55

GBP/USD: GBP has stabilized just above 1.25 - Scotiabank

UK data reports today were roundly disappointing, weighing on the Pound Sterling (GBP).
New
update2024.11.22 21:47

EUR/JPY Price Prediction: November bear trend unfolds

EUR/JPY staircases down from its Halloween peak as it unfolds in a short-term downtrend during November.
New
update2024.11.22 21:43

EUR/USD: EUR slumps on weak PMI data - Scotibank

The Euro (EUR) plunged in response to poor macro data reports earlier.
New
update2024.11.22 21:42

USD/CAD: CAD softer but outperforms most peers - Scotiabank

USD/CAD got caught in the crossfire of the hefty US Dollar (USD) advance against the European currencies earlier, rising quickly from the mid/upper 1.39s to an intraday high near 1.4020.
New
update2024.11.22 21:39

USD surges on weak European data - Scotiabank

The US Dollar (USD) is ending the week on a strong note. The DXY raced to a new, two-year high overnight in response to weak European data but has conceded a lot of those gains ahead of North American trading, Scotiabank's Chief FX Strategist Shaun Osborne notes.
New
update2024.11.22 21:34

Crude Oil tries to claim $70 as geopolitics supports price

Crude Oil price steadies on Friday and tries to claim the $70 level after surging over 4.5% so far this week, fueled by fresh escalation between Russia and Ukraine. Both countries are rushing to get the tactical upper hand ahead of possible resolution
New
update2024.11.22 21:14

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel