Pound Sterling (GBP) Falls as UK Jobs Data Disappoints
While UK unemployment fell 0.1% in September, news that Average Weekly Earnings failed to rise in the third quarter and a worse-than-expected Claim Count Change has seen Pound Sterling fall against the common currency. This could be further compounded later today when the European Central Bank (ECB) President Mario Draghi gives his latest speech, providing greater market certainty and potentially strengthening the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate started the day holding the 1.40 mark ahead of key UK jobs data and Gross Domestic Product figures from the Eurozone later in the week.
Pound Sterling (GBP) Still Hurt by Bank of England (BoE) Dovish Announcements Last Week
With an absence of any key UK economic data so far this week Pound Sterling has had little to strengthen it in the face of the beating it took after ‘Super Thursday’. Another dovish decision by the Monetary Policy Committee (MPC) to hold interest rates at 0.5% and a cautious inflation report, pushing back the likelihood of hitting Bank of England targets of 2% until 2017, saw Pound Sterling plummet across the board.
The GBP/EUR exchange rate has made up some ground since toppling from its pre-Thursday high of 1.4193, but it is currently trending narrowly between 1.4019 and 1.4071.
EUR/GBP Exchange Rate Holding Steady as Europe at Odds over Greek Bailout
While faced with a weak British asset, the Euro has been unable to make significant advances thanks to market insecurity brought about by another disagreement over the Greek Bailout. Greece secured a third bailout of €86 billion in the summer, but creditors are currently withholding the next €2 billion tranche.
The friction has been caused by demands from creditors that Greece implements new laws to help banks repossess homes from those who default on their mortgage payments. Greek Prime Minister, Alexis Tsipras, is holding out for an exemption for first time homes in an attempt to give families greater protection.
Jeroen Dijsselbloem, president of the Eurogroup, stated that ‘The €2bn will only be paid out once the institutions give the green light and say that all agreed actions have been carried out and have been implemented. That still has not happened.’
The Euro has also been hampered by hints from the European Central Bank (ECB) earlier this month which suggest more stimulus could be on the way.
The Euro to Pound Sterling exchange rate is currently experiencing little movement, trending around 0.71.
GBP/EUR Exchange Rate Forecast: UK Employment and German GDP Figures Could See Bullish Change
The current phase of little movement has mostly been caused by a lack of any significant data to push either the Pound Sterling or the Euro into a position of strength. Things could change tomorrow with the release of UK employment data. Employment Change is expected to print at 120K, slightly less than the previous quarter, while Average Weekly Earnings could see a small rise to 3.2%. The three month Unemployment Rate is anticipated to hold steady at 5.4%.
Good performance for UK employment could send Pound Sterling upwards, but any significant change in the GBP/EUR exchange rate is likely to depend upon Friday’s Eurozone data. German Gross Domestic Product is forecast to rise from 1.6% to 1.8%, with experts also predicting a 0.2% rise in Year-on-Year (YoY) Eurozone GDP, up to 1.7%. Strong data here could push the EUR/GBP rate up, while figures below those anticipated could finally give Pound Sterling an opportunity to rally.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4054.