The Pound has fared poorly against the Euro today, seeing a continuous decline since the morning’s jobs data came out.
- GBP EUR rate slides to 1.1125 – EUR GBP trades down at 0.8991
- Pound tumbles as wage squeeze persists – Fears grow about Christmas spending
- Euro rallies on forecast-beating trade data – September surplus beats forecasts
- Will Pound fall further on sales stats? – Euro could slip on inflation data
On the other side of the pairing, Euro gains are down to strongly supportive trade balance stats.
Pound Traders Unsettled by Continuing UK Wage Squeeze
The headline news today has been that UK wage growth has remained in the region of 2.2%, with and without bonuses included.
This leaves the pace of inflation above the rate of wage growth, meaning that UK consumers face more pressure on their real incomes going ahead.
In other news, UK unemployment has remained at 4.3% and jobless claims haven’t risen by quite as much as expected.
Looking at the glacial pace of wage growth was Ben Brettell of Hargreaves Lansdown;
‘In theory, with unemployment so low, sooner or later demand for labour will outstrip supply and workers will be able to demand higher wages.
But it looks like something fundamental has changed in the labour market, allowing wages to remain depressed despite low unemployment.
Perhaps technological developments and global competition has weakened the bargaining power of the worker.
Ultimately the pay squeeze could be ended by falling inflation, rather than an acceleration in wage growth’.
Euro Surges as Trade Balance Beats Forecasts
The Euro has risen by 0.4% rise against the Pound today, thanks to a much better-than-expected Eurozone trade balance reading.
The trade surplus has risen from 15.5bn in August to 26.4bn in September, a better result than the expected 25.1bn outcome.
Elsewhere, European Central Bank (ECB) official Peter Praet has promoted the idea of future interest rate hikes, saying;
‘As we progress towards a sustained adjustment in inflation…the residual monetary support needed to assist the economy will increasingly come from forward guidance on our policy rates.
Policy rates will eventually regain their status as the main instrument of policy, and our forward guidance will revert to a singular approach’.
Pound Losses could Worsen on UK Retail Sales Stats
The week may only get worse for the Pound on Thursday, depending on the outcome of UK retail sales stats.
Forecasts are for a slowdown in sales in October, with and without fuel sales included.
In the wake of the latest inflation and earnings data, lower sales may panic traders if they suggest falling consumer spending before the traditional Christmas boom.
Current Interbank GBP EUR Exchange Rates
At the time of writing, the Pound to Euro (GBP EUR) exchange rate was trading at 1.1125 and the Euro to Pound (EUR GBP) exchange rate was trading at 0.8987.