EURGBP has high-level economic data released Tuesday and could provide volatility over the coming days.
German inflation and UK employment are the headline numbers for traders to assess.
EURGBP – Daily Chart
The EURGBP has been stuck at resistance around the 0.8870 level and may be ready for a pullback.
German inflation is expected to drop from 10% to 8.6%, which may disappoint.
For the UK, a bleak jobs report would expect a change of around 5,000 jobs in comparison to the previous 27,000. A better-than-expected return on jobs or improving wage data could help the UK outlook.
The day will also see the release of ZEW economic sentiment data for the Eurozone and Germany. An improvement to the recent months’ negativity could help the euro.
The UK economy is under pressure with fears of a recession after the Bank of England raised interest rates to 3.5% at nine monthly meetings. That was to combat higher inflation and falling wages, but it has added pressure to mortgage and debt repayments. Some improvement in wages could be a boost to the UK outlook.
Economists are heaping gloom on the UK economy. Still, the European Central Bank is expected to increase interest as the BoE pauses.
However, Goldman Sachs said in a note on Tuesday that it expected the euro area to avoid a technical recession in 2023. The bank predicts the economy will grow 0.6pc this year, compared with its previous forecast of a contraction.
Signs of resilience in the eurozone have led traders to believe that the European Central Bank (ECB) will continue to raise interest rates rapidly. Goldman now expects interest rates to be around 3.25pc by May.
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