- EUR / GBP is witnessing further sales following the release of UK employment details.
- The ECB’s outlook further contributes to the relative poor performance of the common currency.
- Brexit issues could prevent GBP bulls from opening new positions and help limit losses.
A sudden spike in GBP demand dragged the EURGBP cross to more than two-week lows, around 0.8450, at the start of the European session on Tuesday.
After a brief consolidation during the early part of the trading action, the EUR / GBP cross encountered new selling and moved lower for the third day in a row. The last phase of the sudden fall in the last hour arrived following the release of the UK monthly employment details, which provided a good boost to the British pound.
The UK Office for National Statistics reported that the unemployment rate decreased more than expected, to 4.3% in September from the 4.5% seen in August. Other details revealed that Average earnings including bonuses increased 5.8% in September, surpassing the estimate of 5.6%, while the number of applicants for unemployment benefits fell by 14.9000 in October.
This data arrives following upbeat remarks the day before from Bank of England Governor Andrew Bailey, which in turn acted as a tailwind for the British pound. Speaking before the UK Parliament’s Treasury Select Committee, Bailey said he was very uneasy about the inflation outlook and that all future monetary policy meetings could now see a rate hike.
On the contrary, the president of the European Central Bank, Christine Lagarde, continued to reject the markets’ expectations for tighter monetary policy. This was seen as another factor behind the relative underperformance of the common currency. Having said that, deadlock on Northern Ireland Protocol to Brexit deal could limit GBP gains and help limit losses on the EUR / GBP cross.
Market participants now await the publication of the preliminary figure for eurozone GDP for the third quarter of 2021 to get some momentum. During the American session, investors will take the indications of the speech programmed by the President of the ECB, Christine Lagarde, to take advantage of some short-term opportunities.
EUR / GBP technical levels