EUR/GBP flattens above 0.8500 while BoE’s Bailey warns of UK labor market risks
The EUR/GBP pair trades flat around 0.8525 during European trading hours on Wednesday. The cross flattens as market experts reassess their expectations for the Bank of England’s (BoE) monetary outlook for the remainder of the year amid growing concerns over United Kingdom’s (UK) job market.
On Tuesday, BoE Governor Andrew Bailey stated in his testimony before the Lords Economic Affairs Committee on Tuesday that the centra bank has started seeing “labour market softening, and wage settlements are likely to come off," Bailey said. He added that the increase in employers’ contribution to social security schemes seems to be “affecting labour market”.
Theoretically, increasing concerns over job growth paves the way for more interest rate cuts from the BoE. The labor market data for three months ending April also showed that the ILO Unemployment Rate accelerated to 4.6%, the highest level in the jobless rate seen since July 2021.
Meanwhile, investors await the revised Q1 Gross Domestic Product (GDP) data, which will be released on Friday. The Office for National Statistics (ONS) is expected to stay with their preliminary estimates that the economy expanded at a 0.7% pace.
In the Eurozone region, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for June for bloc’s major regions, which will provide cues about whether the European Central Bank (ECB) will continue reducing interest rates.
Source: FXstreet
