In the early European session, EUR/GBP has registered a modest uptick following the release of UK average earnings data for November. Analysts at ING delve into the implications for the Pound Sterling (GBP) and offer insights into the currency‘s outlook.
The Pound Sterling faces headwinds
The UK’s average earnings for November have reported a 6.5% 3-month year-on-year rate, marking the lowest figure since March of the previous year. While acknowledging this dip, economists at ING caution against overreacting to the data. They highlight that a more pivotal release for the Bank of England (BoE) will be the forthcoming December Consumer Price Index (CPI) release scheduled for Wednesday.
BoE Governor’s testimony adds to the landscape
Today, market participants are advised to keep a close eye on the testimony from Bank of England Governor Andrew Bailey. Although the BoE is not typically associated with excessive communication between meetings, recent market pricing suggests an anticipation of 130 basis points of BoE easing throughout the year. If Governor Bailey provides pushback against this expectation, analysts anticipate a potential reversal in GBP/USD to the 1.2750/1.2800 area.
As the market awaits further economic indicators and central bank communication, the movement in EUR/GBP reflects the nuanced dynamics influenced by the UK’s average earnings data. All eyes remain on the upcoming CPI release and Governor Bailey’s testimony for further clarity on the Pound Sterling’s trajectory.
