Sterling slides on weak UK jobs, German ZEW survey ahead

The euro-sterling currency cross rose after halting its four-day losing streak, trading around 0.8800 in the early European hours on Tuesday.

EURGBP appreciates as the Pound Sterling loses ground following the release of the UK labour market report, while traders shift their focus toward Germany’s ZEW Survey data due later in the day.

UK ILO Unemployment rose to 5.0% in the three months to September after reporting 4.8% prior, against the market expectations of 4.9%. The Employment Change data arrived at -22,000 in September versus 91,000 in August.

UK Average Earnings, excluding bonuses, in the three months to September, edged higher by 4.6%, following a 4.7% growth booked previously. The market consensus was for a 4.6% reading.

Meanwhile, Average Earnings, including Bonus, increased by 4.8% in the same period after accelerating by 5.0% in the quarter through to August. The data missed the estimate of 4.9%.

The EURGBP cross also draws support as the Euro receives support from the cautious tone surrounding the European Central Bank policy outlook.

Traders anticipate the ECB will keep interest rates unchanged for now, backed by steady economic performance and inflation near target. Money markets see only a 40% chance of a rate cut by September 2026.

ECB Vice President Luis de Guindos said on Monday that current policy rates are appropriate, emphasising the need for the bank to stay “very prudent and cautious,” despite reduced uncertainty following a recent US-EU trade deal.

(Source: OANDA)