Sterling recovers despite weak UK jobs data, pressuring the Euro as traders await Wednesday’s inflation report.
EUR/GBP fell toward 0.8550 on Tuesday, erasing earlier gains despite a stronger-than-expected German ZEW sentiment survey. The index rose to 34.2 in August, surpassing forecasts of 30.0 and July’s 26.3 reading, but failed to support the Euro.
The Pound stabilized after UK labor data showed unemployment holding at 4.9%, above the 4.8% estimate, while employment growth slowed. Analysts noted cooling wage pressure, reducing expectations for a Bank of England rate hike this year.
Focus shifts to Wednesday’s UK CPI data, with consensus at 2.9% YoY, up from 2.6%. A higher print could revive BoE tightening bets, weighing further on EUR/GBP.