The EURGBP pair was lower on Tuesday despite a report showing a big rise in U.K. unemployment. The unemployment rate rose to 4.5% from 4.1% between May and July due to a surge in redundancies.
Analyst expectations for a loss of -30k jobs were blasted away by a loss of -1.53 million jobs. Redundancies are also at a record since the 2008 global financial crisis. The figures will put pressure on the government to take action over fears that the losses will continue when the furlough scheme ends.
The pound strength is also a little surprising with Brexit talks still in limbo. U.K. Prime Minister Boris Johnson said the time left for a deal was in “short supply” as talks are set to continue at Thursday’s EU summit. That day was the subject of Johnson’s previous threat to “walk away” from talks, which would have seen a No-Deal outcome as the most likely.
The pressure on the Euro this morning was driven by the German inflation figures, which although they met analyst expectations, came in at -0.2%. That continues the deflationary path of the Eurozone and increases the chances that the ECB may have to take action to weaken the single currency.
EURGBP Technical Outlook
EURGBP closed through the 50-day moving average yesterday and this is the key to further gains or losses. The downside is favoured with a tight stop at 0.9080 and a target of 0.8870 (210 pips). The pair can still return to the upside if today closed near the stop level. The Investing Cube team is currently available to assist with trading in currencies with the Forex Trading Course or through one-to-one coaching.