EUR/GBP Rises on Easing UK Wage Growth

  • EURGBP
    (${instrument.percentChange}%)

EUR/GBP Analysis

Markets appear to cheer today's wage data from the UK, since pay growth eased further to 5.6% in the November-January period, marking the slowest pace in more than a year. The historically high wages gave been a constant headache for the BoE as they make controlling inflation harder. Their deceleration may help the Bank of England towards a pivot, putting pressure on the Pound. The Euro meanwhile finds support from last week's policy decision, as President Lagarde did not entertain rate cut talks during her press conference and stressed that "we're not there yet" in terms of inflation [1]

After narrowly avoiding new 2024 lows, EUR/GBP rebounds this week, with the help of the aforementioned developments. This gives it the opportunity to take another crack at the pivotal 38.2% Fibonacci of the last leg down, but we are cautious around further gains, as the upside is unfriendly from a technical prospective.

A series of comments from ECB officials that hinted to rate cuts within the summer, following last week's policy decision and the lower inflation forecasts don't bode well for the Euro [1]. The Bank of England may have implied peak rates [2], but has more work to do on inflation, despite progress. Its European counterpart is closer to a pivot, so the policy differential remains unfavorable for EUR/GBP. It has already rejected the 38.2% Fibonacci, below of which (and the EMA200) the bearish momentum is intact. As such, there is still risk for a test of 0.8491, although sustained weakness below it has a higher degree of difficulty.

Trade the News: View our Economic Calendar

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 12 Mar 2024 https://www.ecb.europa.eu/press/pressconf/2024/html/ecb.is240307~314650bd5c.en.html

2

Retrieved 25 May 2024 https://www.bankofengland.co.uk/monetary-policy-report/2024/february-2024

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.