Market Analysis

The EUR/GBP is trading at 0.8350 and is losing following important data from both economies

Amos Simanungkalit · 15 Oct20.7K Views

The EUR/GBP pair continues to weaken for the third consecutive day, currently trading around 0.8350 during the European session on Tuesday. This decline follows the release of mixed employment figures from the United Kingdom (UK).

The UK ILO Unemployment Rate dropped to 4.0% in the three months leading up to August, down from 4.1% in July and below the market expectation of 4.1%. Additionally, the Employment Change for August reported a significant increase of 373,000, rising from 265,000 in July. However, Average Earnings excluding Bonuses increased by 4.9% year-on-year for the same period, meeting expectations but slightly below July's growth of 5.1%.

Traders are likely to focus on upcoming key economic indicators from the UK, scheduled for release on Wednesday, including the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Price Index. These data points could impact the Bank of England's (BoE) policy outlook. Nevertheless, BoE officials have suggested the possibility of resuming rate cuts at their next meeting in November.

In the Eurozone, France's Consumer Price Index (CPI) saw a monthly decline of 1.2% in September, following a 0.5% rise in August. This represents the largest monthly drop in prices since records began in 1990. Year-on-year, inflation increased by 1.1%, down from 1.8% in August, mainly due to significant reductions in energy prices and a slowdown in service costs.

In Spain, annual inflation was reported at 1.5% in September, the lowest since March 2021, compared to 2.3% in the previous month. Monthly inflation decreased by 0.6% in September, as anticipated, while annual core inflation also fell by 2.4%.

According to the October 2024 Bank Lending Survey (BLS), euro area banks have noted the first negative impact of the European Central Bank's (ECB) interest rate decisions on their net interest margins since late 2022. Furthermore, the ongoing effects on the volumes of interest-bearing assets and liabilities remain negative.