EUR/GBP recovers from 0.8700 as Eurozone GDP contracts by 0.1% as expected
|- EUR/GBP discovers significant buying interest near 0.8700 on restricted GDP contraction in Q3.
- The Pound Sterling weakens against the Euro amid weak labor demand in the UK economy.
- UK’s upbeat wage growth has elevated consumer inflation expectations.
The EUR/GBP pair recovered sharply after defending the crucial support of 0.8700 as the preliminary Eurozone Q3 Gross Domestic Product (GDP) contracted by 0.1% as expected. The output by firms dropped as consumer spending remained vulnerable due to the entrenched cost of living crisis. The pace at which Eurozone firms hired job-seekers was higher at 0.3% against 0.2% recorded earlier.
The Euro seems recovering against the Pound Sterling on upbeat labor demand while employment levels in the United Kingdom economy fell further in the quarter-to-September period.
Earlier, the Pound Sterling discovered buying interest after mixed UK labor market data. The wage growth broadly outperformed while employment levels weakened further.
Average Earnings excluding bonuses for the quarter-to-September period rose by 7.7% as expected but softened from the former reading of 7.9%. The wage growth including bonuses grew at a stronger pace of 7.9% against expectations of 7.4%. Strong wage growth is expected to keep price pressures persistent ahead.
UK employers shed 207K jobs in three months to September, which were higher than expectations of 198K and the former reading of 82K. The UK laborforce squeezed for the third time in a row. UK firms slowed hiring due to poor demand outlook amid weak consumer spending in domestic and overseas markets.
A slowdown in job growth may not ease Bank of England (BoE) policymakers’ concerns about higher inflationary pressures as upbeat wage growth will prompt expectations for a higher price index.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.