The EURGBP exchange rate will see the release of UK jobs data on Tuesday, ahead of a speech by the European Central Bank President.
EURGBP – Daily Chart
The price of EUR/GBP has vaulted above the 0.8737 level, which has been a stubborn resistance this year. The currency pair is edging closer to parity, which would be a psychological loss for the UK economy.
UK jobs market data is released at 2 pm HKT with October claimant counts expected to dip to 20.3k from 25.8k. However, the economy is expected to see unemployment rise to 4.9% nationwide.
British employers expect to hike wages by 3% in the next 12 months, but some recruiters expect artificial intelligence to cut the number of jobs available. A survey found that 1 in 6 employers expect AI tools to help them reduce their headcount over the next 12 months.
On interest rates, the Bank of England held interest rates at 4% last week, but officials said it could be on course to cut rates at its next meeting in December. The UK jobs data will be followed by a speech from ECB President Christine Lagarde at 3:20 pm HKT.
Analysts will be looking to her speech for clues on monetary policy, but recent speeches may have clarified matters for now. After holding interest rates steady recently, headwinds still exist in the economy.
“Forward-looking wage indicators point to slower wage growth this year,” Lagarde said. She added that trade was volatile and that inflation was more uncertain than usual.
One of the key drivers of EUR/GBP is the upcoming UK Chancellor’s budget. Set to be announced on 26 November, it could bring some pain for businesses and workers. The government has to fill a budget hole of up to $30 billion in the upcoming budget, which could lead to tax increases.
A budget that fails to deliver on growth plans could spark a weaker pound and move EUR/GBP closer to 1.00 for the first time.
