Daily currency update
The pound tumbled yesterday against major peers after disappointing UK labour data. Figures showed employers cut 22,000 jobs, adding to 91,000 losses in the three months to August – the first overall drop in employment since 2024.
The euro held firm despite a weak German ZEW survey, which showed investor sentiment slipping to 38.5 from 39.3 (below expectations of 40+). The single currency stayed above 0.8800 against sterling, supported by optimism for stronger Eurozone growth into 2026.
In the US, private employers shed an average of 11,250 jobs per week in late October, signalling a cooling labour market and weaker hiring momentum ahead.
Key movers
The ECB has been working on a digital version of the single currency to strengthen the euro area’s monetary sovereignty, but the legislative process has been mind numbingly slow as some French and German banks oppose the project. They say that it could see millions of Europeans use an online ECB wallet for daily payments which in turn would drain away their bank deposits. A digital euro is expected to be launched in 2029 after a pilot phase in 2027.
The labour market cooling is giving the BoE more room to consider easing monetary policy. The combination of rising unemployment, slowing pay growth and mounting slack suggests that the BoE may favour a rate cut in the near term, likely December is becoming more plausible. That said, the bank will still want to see confirmation of the trend (in inflation, wages, demand) before acting. Governor Andrew Bailey has made is crystal clear in previous statements that ” the BoE could cut interest rates faster if the job market slows”.
Several Federal Reserve (Fed) officials have recently made noteworthy comments that reflect a split in views on how quickly policy should move and how much weight should be placed on the weakening labour market versus persistent inflation. The Fed is not locked into a rate‑cut path and is showing increased caution as it is balancing signs of labour‑market softening and affordability risks against a still‑persistent inflation backdrop. Markets expect another 25 basis point rate cut by the FOMC in December.
Expected Ranges
GBP/USD: 1.3120 – 1.3170 ↑
GBP/EUR: 1.1315 – 1.1365 ↑
EUR/USD: 1.1570 – 1.1620 ↑
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