EUR/GBP remains above 0.8400 following UK Jobs data, ZEW Economic Sentiment Surveys eyed

EUR/GBP holds steady after the release of mixed employment data from the United Kingdom.
The UK ILO Unemployment Rate edged up to 4.5% in the three months to March, slightly above the previous 4.4%.
ECB officials signaled that the ongoing policy review is likely to reinforce existing strategies, including quantitative easing (QE).

Akhtar Faruqui FXStreet

EUR/GBP halts its six-day losing streak, trading around 0.8420 during the early European hours on Tuesday. The currency cross holds ground following the release of mixed employment data from the United Kingdom (UK). Later in the day, traders will focus on the ZEW Economic Sentiment surveys for May from both Germany and the broader Eurozone, which provide insight into institutional investor confidence.

Data from the UK’s Office for National Statistics (ONS) showed that the ILO Unemployment Rate ticked up to 4.5% in the three months to March, slightly above the 4.4% reported in the previous quarter and in line with market expectations. Meanwhile, Claimant Count Change rose by 5,200 in April, following a revised drop of 16,900 in March. The figure came in better than the anticipated increase of 22,300. Employment Change showed a gain of 112,000 in March, down from 206,000 in February.

Wage growth data was also mixed. Average Earnings, excluding bonuses, rose 5.6% year-over-year in the three months to March, slightly below the previous 5.9% and under the expected 5.7%. Including bonuses, wages increased 5.5%, beating forecasts of 5.2% but lower than the revised 5.7% recorded previously.

On the Eurozone front, Reuters reported that several European Central Bank (ECB) officials indicated the ongoing policy review is expected to reaffirm previous strategies, including quantitative easing (QE), despite some internal criticism. Policymakers also signaled the ECB will maintain language referring to "forceful action" during periods of low rates and inflation.

Economic Indicator

ILO Unemployment Rate (3M)

The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.

Why it matters to traders?

The Unemployment Rate is the broadest indicator of Britain’s labor market. The figure is highlighted by the broad media, beyond the financial sector, giving the publication a more significant impact despite its late publication. It is released around six weeks after the month ends. While the Bank of England is tasked with maintaining price stability, there is a substantial inverse correlation between unemployment and inflation. A higher than expected figure tends to be GBP-bearish.

Economic Indicator

ZEW Survey – Economic Sentiment

The Economic Sentiment published by the Zentrum für Europäische Wirtschaftsforschung measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic. A positive number means that the share of optimists outweighs the share of pessimists. usually, an optimistic view is considered as positive (or bullish) for the EUR, whereas a pessimistic view is considered as negative (or bearish).

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