The EUR/GBP pair edged higher on Tuesday, climbing toward the 0.8800 level and snapping a four-day losing streak. The Pound Sterling weakened after the latest UK labor market report showed signs of cooling, giving the Euro room to recover in early European trading.
Fresh data revealed the UK unemployment rate rose to 5.0% in the three months to September, up from 4.8% previously and slightly above market expectations. Employment dropped by 22,000, reversing August’s strong 91,000 increase. Wage growth also eased: regular pay grew 4.6%, in line with forecasts, while total earnings slowed to 4.8%, missing the expected 4.9%.
The softer labor data reinforced concerns about economic momentum in the UK, pressuring the British Pound and boosting EUR/GBP demand.
Meanwhile, the Euro gained support from firm expectations that the European Central Bank (ECB) will keep interest rates steady in the near term. Policymakers continue to strike a cautious tone as inflation remains close to target and economic indicators stabilize. Markets currently price in just a 40% chance of an ECB rate cut by September 2026.
Speaking on Monday, ECB Vice President Luis de Guindos reaffirmed that current rate levels are appropriate, stressing the importance of a prudent approach even as global trade uncertainty eases following a recent US-EU trade deal.
Market participants now turn their attention to today’s German ZEW Economic Sentiment Survey, which may provide further direction for the Euro and EUR/GBP momentum.
