On Tuesday, the EUR/GBP exchange rate saw some bullish activity, putting a stop to a sharp decline that followed yesterday’s peak of 0.8730, the highest it’s been since April 7. Prices have mostly hovered around 0.8680 during the early European session, showing little movement after the latest UK employment numbers came out.
The UK Office for National Statistics (ONS) indicated that the ILO unemployment rate unexpectedly increased to 5% for the three months leading to March, up from 4.9%. Interestingly, while 26,500 individuals sought unemployment benefits in April—less than the anticipated 27,300—the downward revision of the previous month’s applicants from 26,800 to 4,900 has somewhat cushioned the British pound (GBP), presenting a challenge for the EUR/GBP pair.
That said, with the ongoing political turmoil in the UK, significant gains for the pound seem unlikely right now. Reports suggest that British Prime Minister Keir Starmer is under rising internal pressure, with chatter about a potential leadership challenge growing louder, particularly after a former health secretary expressed an intention to vie for his position. This situation might keep traders from making bold bullish moves on the pound and continue supporting the euro-pound cross.
On the flip side, the euro is getting a boost thanks to some hawkish comments from European Central Bank (ECB) officials. ECB Governing Council member Giannis Stournaras noted recently that the ECB’s gradual interest rate increases could help control inflation without harming the economy. This perspective could favor EUR/GBP bulls, hinting that if there’s any pullback, it might be seen as a chance to buy in, suggesting that current favorable conditions are likely to persist.
