- EUR/GBP depreciates after the release of the UK employment report.
- The UK ILO Unemployment Rate remained unchanged at 4.3% in the three months to October, as expected.
- ECB President Lagarde indicated that the central bank is prepared to cut rates further if disinflation remains on track.
EUR/GBP extends its losses for the second successive session, trading around 0.8260 during the early European hours on Tuesday. The EUR/GBP cross faces challenges as the Pound Sterling (GBP) recovers its losses after the release of UK jobs data.
The UK ILO Unemployment Rate stayed unchanged at 4.3% in the three months to October, the data published by the Office for National Statistics (ONS) showed on Tuesday. The reading matched the market estimate of 4.3% in the reported period. Meanwhile, Employment Change reported the number of employed individuals rose by 173,000, against the previous 253,000 increase. Moreover, Claimant Count Change reported 0.3K jobless benefits claims for November, drastically lower than the expected 28.2K.
Traders will shift their focus toward the Consumer Price Index (CPI) inflation figures on Wednesday, ahead of the Bank of England's (BoE) rate decision on Thursday. The BoE is widely expected to maintain interest rates, with an anticipated eight-to-one vote split, as one notably dovish policymaker is likely to support a rate cut.
On Monday, ECB President Christine Lagarde spoke at the Annual Economics Conference, indicating that the ECB is prepared to cut rates further if incoming data confirm that disinflation remains on track. Lagarde also signaled a shift in policy stance, noting that the previous bias toward maintaining "sufficiently restrictive" rates is no longer warranted.
Data showed on Monday that Eurozone PMI figures exceeded expectations in December; however, Services PMI surveys remain in contraction territory amid growing concerns about a deepening economic slowdown in Europe, which continues to weigh on investor and business sentiment. Traders are expected to focus on mid-tier German data, including December's Business Climate and Current Assessment reports from the CESifo Group.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
Gold retreats from record highs at $3,220 ahead of US data
Gold price is retreating from fresh all-time highs of $3,220 in early Europe on Friday. The US Dollar downward spiral and escalating trade war between the United States and China continue to underpin the safe-haven appeal of Gold price. US PPI inflation data and tariff updates remain on tap.
EUR/USD gathers strength above 1.1300 ahead of Lagarde's speech
EUR/USD regains traction and jumps beyond 1.1300 in Friday's European session. The pait stays supported amid easing US-EU trade tensions and broad US Dollar weakness. Tarff talks will be closely eyed alongside Lagarde's speech and US data.
GBP/USD holds gains near 1.3000 after UK data
GBP/USD is paring back gains to near 1.3000 in Friday’s early European session. The pair stays firm as the US Dollar loses ground amid lingering concerns over US economic growth and US-China trade war. Upbeat UK economic data fail to impress the Pound Sterling.
Bitcoin, Ethereum and Ripple show weakness while XRP stabilizes
Bitcoin and Ethereum prices are hovering around $80,000 and $1,500 on Friday after facing rejection from their respective key levels, indicating signs of weakness. Meanwhile, Ripple broke and found support around its critical level; maintenance suggests a recovery on the cards.
Trump’s tariff pause sparks rally – What comes next?
Markets staged a dramatic reversal Wednesday, led by a 12% surge in the Nasdaq and strong gains across major indices, following President Trump’s unexpected decision to pause tariff escalation for non-retaliating trade partners.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.