EUR/GBP remains in positive territory near 0.8450 after mixed UK employment data

  • EUR/GBP is trading in positive territory near 0.8450 in the European session on Tuesday morning.
  • The UK unemployment rate rose to 4.4% in the three months to November; the change in the number of applicants was 0.7K in December.
  • The ECB’s dovish comments could weigh on the common currency.

The EUR/GBP cross extends its rise towards around 0.8450 during the European session on Tuesday morning. The British Pound (GBP) weakens after the UK jobs report. Later on Tuesday, traders will be watching Germany’s ZEW survey for January for fresh impetus.

Data released by the UK’s Office for National Statistics on Tuesday showed the country’s ILO unemployment rate rose to 4.4% in the three months to November. This figure fell short of expectations of 4.3% during the reporting period. Meanwhile, the change in the number of applicants increased by 0.7K in December versus -25.1K (revised from 0.3K) previously, beating the expected figure of 10.3K. GBP remains weak in an immediate reaction to the mixed UK employment report.

Additionally, an unexpected decline in UK retail sales data has fueled dovish bets from the Bank of England (BoE), weighing on the GBP. The UK central bank is widely anticipated to cut the interest rate by 25 basis points at its February meeting. Markets have priced in a total of more than 75 basis points (bps) of rate cuts through 2025, up from around 65 bps before the data.

On the other hand, more aggressive market bets on European Central Bank (ECB) rate cuts could put some selling pressure on the Euro (EUR). UBS analysts expect at least 150 bps of ECB rate cuts over the next 12 months. ECB policymakers agreed at the December meeting that interest rate cuts should be approached cautiously and gradually, but also noted that further rate cuts are likely given weakening price pressures.

British Pound FAQs


The British Pound (GBP) is the oldest currency in the world (AD 886) and the official currency of the United Kingdom. It is the fourth most traded foreign exchange (FX) unit in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/ USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The British Pound is issued by the Bank of England (BoE).


The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it has achieved its main objective of “price stability” – a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for sterling, as higher interest rates make the UK a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing. In this scenario, the Bank of England will consider lowering interest rates to make credit cheaper, so that companies will take on more debt to invest in projects that generate growth.


The data released measures the health of the economy and can affect the value of the pound. Indicators such as GDP, manufacturing and services PMIs and employment can influence the direction of the Pound.


Another important piece of information that is published and affects the British Pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.

Source: Fx Street

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