The EURGBP exchange rate will be influenced by UK employment data on Tuesday, followed by German and European PMI data.
EURGBP – 4H Chart
The EUR/GBP price has rallied from support at 0.8721 and is back above support at 0.8756. That is now key to whether the rally continues.
The British jobs market is in focus again ahead of a 2pm HKT release of employment data, with analysts expecting a loss of 22k jobs in the last quarter. The unemployment rate is expected to tick higher to 5.1% from 5.0%.
That’s the highest rate since December 2020 to February 2021, according to the Office for National Statistics, which has raised expectations of a December interest rate cut. Yael Selfin, an economist at KPMG UK, said public-sector pay growth was “approaching a peak,” as large pay increases from last year were not expected to continue due to government budget pressures.
The data continues at 3:30 pm HKT with HCOB services and manufacturing data from Germany. Economists are looking for a rise in manufacturing from 48.2 to 48.5. However, the services economy is expected to dip from 53.1 to 52.8.
The Eurozone has the same data released thirty minutes later, with manufacturing expected to rise from 49.6 to 49.9. The services sector is expected to rise from 53.6 to 53.9.
Analysts do not expect the ECB to cut its key interest rate from 2% at its 19 December meeting, or until 2027. The odds on a rate cut over the next year have increased from 30% to 60%, adding recent support for the euro.
The Bank of England, in contrast, intends to lower its benchmark rate from 4% to 3.75%, but the battle between policymakers in Britain is more intense than in the U.S. Bank of America expects the bank’s voting committee to be split 5-4. The economic contraction in six of the last seven months has increased the chance of a monetary policy easing. Regarding the hawkish argument, is the country experiencing the highest inflation among the G7.
