Euro's Gains Against Pound Reversed Ahead of UK Inflation
The Euro's earlier gains against the Pound have faltered ahead of Wednesday's UK inflation release. Despite soft UK jobs data and a strong German ZEW survey, the cross has slipped back toward 0.8550 at the time of writing on Tuesday.
The German ZEW Economic Sentiment index rose to 34.2 in August, beating the 30.0 forecast and July's 26.3 reading. However, the release drew little reaction in EUR/USD, and it has done little to keep EUR/GBP bid.
The Pound had come under pressure earlier after the UK labor report for the three months to June showed an ILO Unemployment Rate of 4.9%, above the 4.8% forecast. Analysts at ING said the figures were nothing earth-shattering but still point to a cooling jobs market with minimal wage pressure.
The next test comes on Wednesday with UK Consumer Price Index (CPI) data for July, which is expected to show a 2.9% YoY increase, up from 2.6% previously. A hot print would revive BoE hike bets and add to the pressure on EUR/GBP.