GBP under pressure as UK jobless rises to 4.3%

The EURGBP cross gathered strength to around 0.8295 during the early European session on Tuesday. The Pound Sterling weakened against the Euro after the recent mixed UK labour market data. The attention will shift to the German November ZEW survey later on Tuesday.

Data released by the Office for National Statistics (ONS) on Tuesday showed that the UK ILO Unemployment Rate rose to 4.3% in the three months to September, from 4.0% in the previous period, weaker than the expectation of 4.1%.

Meanwhile, the Claimant Count Change increased by 26,700 in October from 10,100 prior (revised from 27,900), below the market consensus of 30,500.

Wage inflation, as measured by Average Earnings excluding Bonus, climbed 4.8% 3M YoY in September versus 4.9% in August,  beating the estimation of a 4.7% rise.

Average Earnings including Bonuses also rose by 4.3% in the same period, compared to 3.9% (revised from 3.8%) quarter through September.

As a result, the Pound Sterling attracted some sellers in an immediate reaction to the UK employment report.

On the other hand, European Central Bank policymaker Robert Holzmann said on Sunday that there is no reason for the ECB not to cut interest rates in December, but the decision will be based on the incoming data.

The expectation that the ECB is likely to deliver more rate cuts might cap the upside for the cross in the near term. Markets have fully priced in a 25 basis points (bps) rate cut then, as well as a nearly 20% chance of a larger 50 bps move.

(Source: OANDA)