Pound to Euro Rate "Steady" as UK Unemployment Climbs

November 13, 2024 - Written by Ben Hughes

STORY LINK Pound to Euro Rate "Steady" as UK Unemployment Climbs

The Pound to Euro (GBP/EUR) exchange rate moved within a narrow range on Tuesday as investors reviewed the latest UK unemployment figures and Germany’s economic sentiment index.

The Pound (GBP) found limited support on Tuesday morning after the release of the latest UK jobs report disappointed GBP investors.

According to data from the Office for National Statistics (ONS), UK unemployment rose sharply to 4.3% in September, up from 4% in August and higher than the anticipated increase to 4.1%.

Despite this, the blow to Sterling was softened slightly by stronger-than-expected wage growth, with total earnings rising from 3.9% to 4.3%, boosted by a recent increase in public sector pay.

Overall, the data confirms that the UK labour market continues to cool, raising expectations that the Bank of England (BoE) may continue cutting interest rates, with markets now eyeing a potential February rate cut.

Paul Daley, chief UK economist at Capital Economics, said:

Overall, there is little here to suggest the Bank of England needs to worry that the loosening in the labour market and the easing in underlying wage growth are coming to an end.

The Euro (EUR) also faced headwinds on Tuesday, following a decline in Germany’s latest economic sentiment survey.

The ZEW economic sentiment index dropped from 13.1 to 7.4 this month, well below expectations of a milder decline to 12.8.

The steep decline in sentiment reflects market concerns over Donald Trump’s recent US presidential election victory and the sudden collapse of Germany’s coalition government.

Looking ahead to the end of the week, the Pound to Euro exchange rate may be influenced by the release of minutes from the European Central Bank’s (ECB) latest policy meeting.

Should the minutes hint at further interest rate cuts in December, the Euro could come under pressure.

Attention will then shift to the UK’s upcoming GDP figures, expected to confirm a slowdown in economic growth during the third quarter.

This may reinforce BoE rate cut expectations, likely leaving the Pound under pressure as the week comes to a close.

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TAGS: Pound Euro Forecasts