EUR/GBP retreats to 0.8590 support after mixed UK employment data, focus on German/EU ZEW statistics
|- EUR/GBP takes offers to reverse early-day rebound from five-week-old rising support line.
- UK Employment Change drops, Unemployment Rate rises but Average Earnings improve.
- Market’s cautious optimism, holidays in multiple European markets prod cross-currency pair traders.
- German, Eurozone ZEW Survey for August will be important for intraday directions, Wednesday’s UK inflation will be the key.
EUR/GBP slides 25 pips to refresh intraday low near 0.8585 heading into Tuesday’s European session. In doing so, the cross-currency pair takes clues from the upbeat UK average earnings while paying a little heed to the downbeat employment change and unemployment rate figures per the latest release from the UK National Statistics.
Talking about the latest UK jobs report, the headline Employment Change marks -66K figures for June versus 50K expected and 102K prior whereas the ILO Unemployment Rate jumps to 4.2% for three months to June compared to the market’s expectations of staying unchanged at 4.0%.
More importantly, the Average Earnings including and excluding bonuses for three months to June improve heavily and boosts the hawkish expectations from the Bank of England (BoE), which in turn seems to have drowned the EUR/GBP price.
On Monday, the UK’s Chartered Institute of Personnel and Development (CIPD) released details of their latest survey while stating that the human resources executives expected to increase basic pay rates by a median of 5% – unchanged from the previous two quarters and the joint-highest readings since the survey started in 2012, per Reuters. The news increases the hawkish bias about the BoE after the upbeat UK growth numbers published the last week.
On the other hand, Germany’s Wholesale Price Index (WPI) for July edged higher to -2.8% YoY from -2.9% previous readings but came in softer than -2.6% expected. However, the monthly WPI figures reprinted the -0.2% MoM numbers versus -1.4% market forecasts.
Following the data, the German Economy Ministry noted that current early indicators do not yet point to a sustainable economic recovery in the coming months, per Reuters. The report, however, also added that the expected cautious recovery in private consumption, services and investment is showing the first signs of hope, which are likely to strengthen as the year progresses.
It’s worth noting that the Euro’s ability to cheer the US Dollar’s retreat from a five-week high, especially ahead of the mid-tier sentiment numbers from the ZEW Institute, puts a floor under the EUR/GBP price. Moving on, ZEW Economic Sentiment numbers for Germany and the Eurozone will be crucial for clear directions.
Technical Analysis
A clear U-turn from the 100-DMA resistance, around 0.8665 by the press time, joins the looming bear cross on the MACD and a steady RSI (14) line to keep the EUR/GBP pair sellers hopeful despite the latest moves.
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