Euro Bounces Back as Pound Slumps After UK Employment Data

The Euro (EUR) has trimmed some of its losses on Tuesday after the British Pound (GBP) fell following mixed UK employment data. The ILO Unemployment Rate remained steady at 4.9% in the three months to July, contrary to expectations of an uptick to 5%. However, jobless claimants increased by 27.8K, more than three times the expected 8.3K increase.

The Bank of England's (BoE) monetary policy decision on Thursday is expected to be closely watched, with investors looking for signs that interest rates will remain unchanged. BoE Governor Bailey has already pushed back against the idea that interest rate hikes are 'inevitable', suggesting that a split vote among committee members could indicate potential future rate hikes.

In related news, the BoE plans to overhaul its bond-selling program and stop selling 20- and 30-year yields, which have boosted the UK's borrowing costs amid global bond market turmoil. The move is expected to be seen as a positive development for the pound.