EUR/GBP falls amid positive UK jobs data

• EUR/GBP fell to 0.8540, below the 200-day SMA.
• UK jobs data strengthened the Pound during the European session.
• Sentiment data caused the Euro to lose interest during the session.

On Tuesday, the EUR/GBP pair fell following the release of UK employment data, which supported the Pound. On the other hand, weak European sentiment figures weighed on the Euro.

The UK published mixed labour market data for the three months ending in June. Average weekly earnings, excluding bonuses, rose 5.4% year-on-year, in line with expectations but slightly above the Bank of England (BoE) projection of 5.1% for the second quarter. Including bonuses, total earnings growth slowed to 4.5% year-on-year, down from 1.2%. This slowdown in wage growth could support the BoE’s easing stance, although upcoming Consumer Price Index (CPI) data will be crucial. In addition, unemployment unexpectedly fell to 4.2%, the lowest level since February.

Meanwhile, Germany’s August ZEW survey indicated significant economic weakness. Expectations fell to 19.2, from 41.8 in July, while the current assessment worsened to -77.3. This marks the second consecutive drop in expectations, reaching the lowest level since January, signalling continued economic challenges in the second half of the year. The deteriorating outlook for the eurozone suggests the European Central Bank (ECB) could continue to ease, with a rate cut in September anticipated.

EUR/GBP Technical Analysis

The EUR/GBP RSI is breaking out of overbought conditions. In parallel, the MACD indicated a discernible decline in its green bars and this change implies a bearish outlook for the EUR/GBP. This is also supported by the decline of the 200-day Simple Moving Average (SMA) of 0.8575, which is now a resistance. The 0.8530-0.8500 zone is the next target for the sellers.

EUR/GBP daily chart