Following the release of UK employment figures and trade data for the Eurozone, the Euro to Pound (EUR/GBP) exchange rate was 0.15% softer.
The Euro slid against its British rival yesterday as the appeal of the Pound was bolstered by upbeat inflation data.
Investors also turned from the Common Currency after ZEW sentiment surveys for the Eurozone and its largest economy fell flat.
With Sterling riding high against the majority of its currency counterparts, the EUR/GBP pairing held declines overnight.
The Pound continued to trade in a stronger position on Wednesday as the UK’s employment report revealed a further decline in the nation’s unemployment rate.
The UK unemployment rate edged down from 6.6% to 6.5% in the three months to May in yet another sign of the robust recovery in the labour market.
As well as adding more positions than expected in the three month period, the number of people filing for unemployment claims dropped by considerably more than anticipated – taking the nation’s employment rate back up to record highs.
The result saw the Employment Minister Esther McVey comment; ‘With an employment rate which has never been higher, record women in work and more young people in jobs, the resilience of the country during the downturn is being rewarded.’
However, it wasn’t all good news for the UK as wage growth was shown to be lagging behind inflation yet again. Average weekly earnings were up by just 0.3% in the three months to May, less than the 0.5% increase expected and the softest pace of wage growth recorded for five years.
Last month Bank of England Governor Mark Carney cited stagnant wage growth as one of the main arguments in favour of leaving interest rates on hold so this result could reduce the odds of a November rate hike.
Despite this disappointment, the Euro to Pound (EUR/GBP) exchange rate remained in a weaker position.
The Eurozone’s Trade Balance report (the only influential data to come out of the region today) showed that seasonally adjusted exports were up 0.6% on the month in May while imports were 0.5% higher.
This resulted in a non-seasonally adjusted trade balance of 15.4 billion Euros, unchanged from April’s revised figure and lower that the 16.5 billion Euros expected.
The EUR/USD pairing was also trending lower on Wednesday as the US Dollar remained supported by comments issued by Fed Chairwoman Janet Yellen.
Yellen intimated that if the US economic recovery continues at a rapid pace, interest rates could be increased sooner than currently expected.
Tomorrow the Eurozone’s final inflation data for June, and the region’s Construction Output figures for May, will be the main cause of volatility in the Euro to Pound (EUR/GBP) exchange rate.
UPDATED: 16:45 GMT 16 July, 2014
EUR/GBP and EUR/USD Holds Decline
Although the news that UK wage growth slowed considerably in the the three months to May did cause some Pound fluctuations, the Euro to Pound (EUR/GBP) exchange rate held its 0.25% decline throughout the European session.
The common currency was trading close to a 22-month low against its British counterpart as the increasing odds of a Bank of England rate increase made a marked contrast with the European Central Bank’s ultra loose fiscal policy.
In the opinion of economist Nick Parsons; ‘The UK economy is on every measure outperforming Euro land […] This is an opportunity to reload with Sterling longs.’
The EUR/USD exchange rate hit a low of 1.3522 even as US Industrial and Manufacturing production was shown to have climbed by less-than-anticipated.
Later in North American trading a gauge of US Homebuilder Confidence was shown to have risen to a six-month high. Fed Chairwoman Janet Yellen also prepared to deliver her second address to lawmakers in two days.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7900,
Euro,,US Dollar,1.3535,
Euro,,Canadian Dollar,1.4569,
Euro,,Australian Dollar,1.4490,
Euro,,New Zealand Dollar,1.5569,
US Dollar,,Euro ,0.7385,
Pound Sterling,,Euro,1.2646,
Canadian Dollar,,Euro,0.6853,
Australian Dollar,,Euro,0.6901,
New Zealand Dollar,,Euro,0.6421,
[/table]
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