Euro edges higher, traders await UK labour data

The EURGBP currency pair trades in positive territory around 0.8685 during the early European session on Monday. The Euro edges higher against the pound sterling as the European Central Bank appears to be near the end of its rate-cutting cycle.

Traders will take more cues from the UK jobs data later on Tuesday.

The Eurozone inflation eased to the ECB’s target, supporting the view of policymakers that interest rates can stay at current levels unless the economic outlook changes significantly.

ECB Vice President Luis de Guindos stated on Thursday that interest rates are at an appropriate level, though he warned of “enormous uncertainty” due to geopolitical risks.

Financial markets currently see limited scope for immediate action, with a chance of rates remaining unchanged at the next meeting. Some analysts expect a rate reduction later in 2026, though a hike is considered unlikely given the subdued inflation backdrop.

UK labour market conditions remained weak in 2025 as companies slowed down hiring to offset the impact of an increase in employers’ contributions to social security schemes. Additionally, the unemployment rate in the UK rose to 5.1% in October, the highest since March 2021.

Traders await the UK jobs data on Tuesday, as it might influence market expectations for the Bank of England’s monetary policy outlook.

Any signs of weakening in the UK labour market could undermine the GBP. On the other hand, a stronger-than-expected outcome could lift the GBP against the EUR in the near term.

(Source: OANDA)