Pound Gains on Oil Prices, But Euro May Get Boost from Wage Expectations

The pound-to-euro exchange rate edged higher on Tuesday due to rising oil prices, which have returned above $100 a barrel. Brent crude oil was up 1.5% on concerns over Saudi crude supplies.

Kathleen Brooks, Research Director at XTB, attributed the move to reports that the Houthis are extending gains in Yemen to take control of the Red Sea, neutralizing some of the good news that Saudi Arabia is ramping up its Gulf oil exports.

The market reads the Eurozone as more exposed to higher oil and gas prices than the UK due to the Eurozone's manufacturing base. The Bank of England voted 6-3 to hold Bank Rate at 3.75% on September 17, leaving it alone among major central banks in holding this month.

UK private sector wage growth stood at 2.8% in June and is trending lower, according to Danske Bank, while public sector pay remains a source of strength in the headline figure.