EURGBP could have some volatility for traders on Tuesday with the release of UK employment and EU GDP numbers.
Analysts expect an additional 40k jobs to be added to the British jobs market.
EURGBP – Daily Chart
EURGBP has seen resistance holding around the 0.89 level, and the first support is ahead at the 0.88 level.
The British pound is heading for a sixth-consecutive day of gains despite some disappointing data on Monday. The UK avoided recession at the end of last year. Still, companies remain pessimistic about hiring as output falls.
The latest Business Trends Report from BDO, the accountancy group, has said that business optimism stagnated at the start of the year. For only the third time in six months, all four of the Indices tracked by the report - Output, Optimism, Employment, and Inflation – fell.
The BDO survey covers over 4,000 companies and saw a sharp decline in growth last month. The BDO Output Index, which follows economic growth, fell for a fourth-straight month. The index lost 3.45 points to 89.15, below the critical 95 level, which marks stagnation.
The drop in output was driven by falling consumer demand in the services sector, which is the majority of the UK economy. The BDO said the cost-of-living crisis “weakened consumer spending and demand across the services sector.”
Business optimism remained effectively static, BDO reports. Service sector firms were pessimistic, but optimism among manufacturing businesses rose thanks to waning input price pressures.
The UK employment release on Tuesday is expected to show an additional 40k jobs added to the economy. Still, the unemployment rate is expected to stay stuck at 3.7%.
The European economy will also see economic data release with a second look at European GDP figures. The Q4 GDP numbers for the UK are expected to drop to 0.1% from 0.3%, while the yearly growth number is expected to drop from 2.3% to 1.9%. The eurozone has raised its growth forecasts and now predicts the European Union will avoid a recession this year, as the fall in gas prices has helped the economy.
