Mixed Forecast for Pound Sterling Following UK Jobs Data: GBP-EUR, GBP-USD Down Today

August 12, 2015 - Written by David Woodsmith

STORY LINK Mixed Forecast for Pound Sterling Following UK Jobs Data: GBP-EUR, GBP-USD Down Today

GBP to EUR Conversion Rate Hits One-Month Low

A combination of worse-than-forecast UK jobs data and improved Greek sentiment resulted in the Pound Sterling to Euro (GBP/EUR) exchange rate dropping to its lowest level for a month. Sterling's declines against the US Dollar were swiftly reversed however as developments in China weighed on US rate hike expectations.

Earlier...

FX Outlook Mixed for GBP Exchange Rate Now: Pound Falls against Euro and US Dollar

Poor UK labour market numbers, published earlier today, have seen the Pound Sterling (currency : GBP) underperform against the majority of the other sixteen most actively traded global currencies.

British Pound News: Sterling Drops against EUR, CHF Today after UK Job Figures Miss Predictions

The British unit has lost over 0.90% of its value against the euro (currency : EUR) on the session, sending the Pound Sterling euro exchange rate down to as low as 1.3943 during early trade. Meanwhile, the Pound has lost an even greater amount against the Swiss Franc (currency : CHF) on the day, sending the GBP CHF exchange rate back down into the 1.5100s.

UK Average Earnings Fall, Employment Declines, Pound Sterling Broadly Softer on Revised BoE Interest Rate Hike Expectations

The official UK jobs data, published by the Office of National Statistics (ONS), showed that the total level of domestic unemployment had increased by 25,000 during the three months to the end of June. This represented the second quarterly increase in joblessness – the first time in two years that this has taken place. Perhaps more worryingly for the UK government, the data also revealed a year-on-year increase of only 2.4% in the level of earnings including bonuses during Q2 – this was significantly down from a counterpart showing of 3.2% for the three months to the end of May. This apparent drop-off in the level of disposable income available to UK economic participants is likely to cause the Bank of England’s monetary policy committee to postpone the first increase in its interest rate in a new hiking cycle until the latter part of next year. Analysts forecast that such an outcome would be likely to hit the Pound Sterling hard into the medium term.

Foreign Exchange Forecast: Pound Sterling Exchange Rate Fortunes Decidedly Mixed

However, John Hawksworth of PwC delved deeper into the figures and put a more positive spin on the current situation in the UK economy, stating earlier that, ‘overall the picture is one of a continuing economic recovery, led by private sector services. But the balance of growth between jobs and productivity seems to be shifting, which could be good news if it makes the upturn more sustainable.’ Meanwhile, David Freedman of the ONS took a ‘glass half empty’ stance, observing that, ‘while it's too early to conclude that the jobs market is levelling off, these figures certainly strengthen that possibility. Growth in pay, however, remains solid.’

Either way, the forecast for the Pound Sterling now appears decidedly mixed.

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