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Euro Pound (EUR GBP) Slips as UK Wage Growth Jumps

The Euro Pound (EUR GBP) exchange rate is trending lower today following an uptick in the UK’s latest wage growth figures.

Pound (GBP) Strengthened by Wage Figures

Sterling pushed higher this morning as the UK’s latest labour report revealed that wage growth surged at the start of the fourth quarter.

According to data published by the Office for National Statistics (ONS) average earnings in the UK rose from 2.3% to 2.5% in October, in line with expectations and reaching a new 2017 high.

Slightly denting the Pound’s gains however was the accompanying employment data which saw the jobless rate hold at 4.3% as the number of people in employment fall for the second consecutive month.

However some analysts point out that this dip in employment may suggest that the UK’s labour market has peaked and that may lead to wages rising faster as employers are forced to invest more in their current work force as the labour market tightens.

Ian Brinkley, acting chief economist at the CIPD said;

‘There is a strong possibility that the continued expansion of the labour market has hit its ceiling. In response, employers would be wise to invest more in their existing workforce, especially in light of recent declines in the number of apprenticeships.’

Euro (EUR) Bolstered by Eurozone Production data

Meanwhile helping to stem the Euro’s losses today was the release of the Eurozone’s latest industrial production figures, with data released by Eurostat showing that factory output across the bloc grew 0.2% in October.

This beat expectations that production would have remained flat after slumping by 0.5% in September and made all the more impressive after German industrial plummeted 1.4% in October.

EUR GBP Forecast: Central Bank Decisions to Prompt Volatility?

Looking ahead movement in the EUR GBP exchange rate will be driven by interest rate decisions by both the European Central Bank (ECB) and Bank of England (BoE).

While neither bank is expected to make any alterations to interest rates tomorrow, investors will be watching both bank’s for hints on how monetary policy will play out in 2018.

Particular focus is likely to be placed on the BoE’s policy outlook as investors will be looking for any signs of whether the continued uptick in inflation and the finalisation of the UK’s Brexit deal will have any bearings on interest rates next year.

However at the same time any potential losses from a dovish ECB meeting may be offset by the release of the Eurozone’s latest PMI figures, which analysts expecting that a strong reading in December will cap off what has been a stellar year of growth in the Eurozone economy.

Current Interbank Exchange Rates

At the time of writing the EUR GBP exchange rate was trending around 0.8810 and the GBP EUR exchange rate was trending around 1.1357.