The Euro to Pound Sterling (EUR/GBP) exchange rate advanced for a second session as economic data out of the UK came in below forecasts and increased expectations that an interest rate hike by the Bank of England will be pushed back.
The Euro to Pound Sterling (EUR/GBP) exchange rate hit a session high of 0.7250
Sterling was already under pressure from increased concerns over the uncertainty surrounding May’s UK general election. With no clear winner expected, economists are fearful that if negotiations to form a coalition drag on the UK economic recovery will suffer.
Data released on Wednesday weakened the Pound as it came in below forecasts. According to the Office for National Statistics (ONS), the UK average earnings index increased less than expected in the three months leading to January. Wages including bonuses rose by a seasonally adjusted 1.8%, missing forecasts for a rise of 2.2%.
Wages excluding bonuses rose by 1.6%, again missing forecasts for a rise of 1.8%.
The ONS also released a report showing that the nation’s unemployment rate remained stable at 5.7%.
The figure matched the lowest level seen for seven years but disappointed analyst who had been expecting another drop to 5.6%. The number of Britons out of work in the UK fell by 102,000 t0 1.86 million in the three months to January.
The minutes of the Bank of England’s most recent policy meeting were also published and showed that all nine members of the Monetary Policy Committee were in favor of leaving the key interest rate at a record low of 0.5% and making no changes to the central bank’s £375 billion asset-purchase program.
The Pound is now likely to come under further pressure as Chancellor George Osborne announces his last budget before the May 7 general election.
Rioting in Frankfurt
Anti-austerity protestors clashed with riot police in the German city of Frankfurt just hours before the grand opening of the European Central Bank’s new headquarters, which cost €1.3 billion.
Dozens of people were injured in the violence, which saw a number of police cars set ablaze, and as stones were thrown.
The protestors were comprised of a left-wing alliance of protesters from across Germany and the rest of Europe to voice their anger at the ECB’s role in austerity measures in EU member states, most recently Greece.
A number of barricades were set up by police and the use of tear gas and water cannon was reported as the protestors advanced upon the new ECB headquarters.
The EUR/GBP currency pair is likely to experience further movement later in the session as investors turn their attention to the Federal Reserve’s Interest rate decision.