EUR Edges Up as UK Jobs Data Disappoints, BoE Prepares for Rate Hold
The Euro has made modest gains against the British Pound after mixed UK employment data was released on Tuesday. The ILO Unemployment Rate remained at 4.9% in the three months to July, defying expectations for a rise to 5%. However, jobless claimants jumped by 27.8K, far exceeding the anticipated 8.3K increase.
The sharp rise in claimants weighed on Sterling, which weakened against the Euro despite the steady ILO rate. This led to a recovery in EUR/GBP from early-session weakness, with the cross trading around the 0.8560 area.
The Bank of England (BoE) is expected to keep interest rates on hold this week, following Governor Andrew Bailey's recent comments against further rate hikes. A split vote among Monetary Policy Committee members is seen as highly likely, and investors will pay close attention to the number of dissenters to gauge future tightening prospects.
The BoE also plans to halt sales of 20- and 30-year bonds amid global bond market volatility, which has lifted UK borrowing costs. This move underscores the sensitivity of UK funding conditions to quantitative tightening at the long end of the curve.