The Pound/Euro continued to fall after my post yesterday, dropping as low as €1.1177 this morning which is the lowest we've seen the pair in about 9 months.
We have since seen the pair bounce back however after UK employment figures released at 09:30am were better than expected.
UK unemployment figures help push Sterling higher
Unemployment is now at 4.5% and wage growth at 2%. Both of these were better than expected and helped push GBP/EUR back to around €1.1250 at the time of writing. Despite the encouraging numbers, wage growth is still lagging behind inflation, and this has kept the Pound from gaining significantly. We also saw better than expected EU industrial production figures earlier today, helping to halt the rise of Sterling/Euro as the single currency strengthened and fought back.
US events likely to drive GBP/EUR and GBP/USD in short term
This afternoon will be interesting as the FED chair Janet Yellen testifies before congress. Her comments could affect not only GBP/USD, but also GBP/EUR. Some currencies move inversely to the USD including the Euro. If her comments strengthen the USD due to interest rate and economic expectations, then the Euro could weaken and help push Pound/Euro rates a little higher back towards €1.13. We also have an interest rate decision from the Bank of Canada this afternoon, along with a policy statement that cou
ld affect GBP/CAD rates.
Looking ahead, the only other UK release of note this week is a Credit conditions report from the BoE. This is relatively minor however and I don't expect it to move the Pound that much. I think data and development from the USA will drive both GBP/EUR and GBP/USD for the remainder of the week.
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