Eurgbp Jumps After Uk Labor Data

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Eurgbp Jumps After Uk Labor Data

Eur/Gbp Jumps After UK Labor Data

EUR/GBP has moved from the 0.8200 area and is now trading above the 0.8330 on Wednesday. In the process, EUR/GBP has made a bounce from its multi-year (2.5) lows, which is a sign that EUR bulls are finally back.

The EUR/GBP moved higher after reports showed that the UK's unemployment rate has gone up. This has also increased the bets that BoE will lower the rate in December.

Boe May Lower Rates At Next Meeting

If we look back, the BoE was one of the few banks that decided to keep rates unchanged due to inflation. One of the biggest factors supporting the GBP was the higher rates in the UK.

But, with all the talks about rate cuts in the UK, the GBP has tumbled lower against the EUR. The data showed that the unemployment rate has gone up from 4.0% to 4.3%.

This reading was a lot higher than the forecast of 4.1% and shows the ill-effects of higher rates on the economy. Now, all the pressure is on the Bank of England to rectify the situation by lowering the rates.

At this stage, a rate cut from the BoW will stimulate growth and lead to job creation in the UK. A direct result of all these developments will be a decline in the unemployment rate.

Meanwhile, the EURO is also weak amid Germany's political crisis and the election results in the USA. Trump has already warned Europe and talked about how they need to pay a big price. What he means by this is the imposing of higher tariffs on Europe for not buying US goods.

If this threat turns into a reality, it would upset the economic dynamics in the Eurozone. Especially, the big economies such as Germany & France would receive a major blow from the new US tariffs.

In the USA, these tariffs will also raise the inflationary pressures and could upset the Fed's plan.

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