Euro Falters Against Pound Ahead of UK Inflation Data

The Euro (EUR) has failed to hold onto its earlier gains against the Pound Sterling (GBP), despite a soft UK labor report and a stronger-than-expected German sentiment survey. The EUR/GBP cross is trading at around 0.8550, slipping lower after the initial rally.

The release of the German ZEW Economic Sentiment index for August came in at 34.2, beating the forecast of 30.0 and July's reading of 26.3. This stronger-than-expected data would normally favor the single currency, but it has had little impact on EUR/GBP.

The UK labor report for the three months to June showed that the ILO Unemployment Rate held at 4.9%, above the forecasted 4.8%. Employment growth slowed, and analysts at ING noted that the figures point to a cooling jobs market with minimal wage pressure. This has left 'little impetus for the Bank of England (BoE) to hike rates this year.'