On Tuesday, the Euro weakened against the British Pound as UK labour-market data supported Sterling. The EUR\/GBP rate dropped nearly 0.25%, settling around 0.8763 after a three-day rise.<\/p>\n
UK labour data from October showed easing conditions yet steady wage growth. Average Earnings Excluding Bonuses increased by 4.6%, slightly lower than the previous data but surpassing expectations. Average Earnings Including Bonuses grew by 4.7%, again higher than predictions. Employment fell by 17,000, with the ILO Unemployment Rate moving up to 5.1%.<\/p>\n
The Bank of England is expected to cut interest rates by 25 basis points this Thursday. In December, UK business activity saw growth, with the Composite PMI Output Index rising to 52.1. The Services PMI reached 52.1, and the Manufacturing PMI climbed to 51.2.<\/p>\n
In the Eurozone, softer PMI data added pressure on the Euro. The Composite PMI Output Index dropped to a three-month low of 51.9 in December. Services and manufacturing both declined, with the Manufacturing PMI at its weakest in ten months.<\/p>\n
Attention turns to upcoming central bank meetings and inflation data from both the UK and Eurozone. The ECB is expected to maintain current interest rates at their meeting on Thursday.<\/p>\n
We are seeing the Pound gain strength against the Euro today, December 16th, 2025, pushing the EUR\/GBP exchange rate down towards 0.8763. This move is supported by UK labour data which showed that wage growth remains firm, even as the jobs market cools slightly. This contrasts with the situation in the Eurozone, which is facing some economic headwinds.<\/p>\n
The divergence in economic performance is becoming clearer and is a key factor for us. The latest UK PMI data showed business activity rising to a two-month high, while the equivalent figure for the Eurozone fell to a three-month low, dragged down by a persistent slump in manufacturing. Recent statistics from Germany\u2019s Federal Statistical Office, Destatis, confirmed a 0.4% fall in industrial production for October 2025, reinforcing concerns about the health of the bloc’s largest economy.<\/p>\n
This week’s central bank meetings are now the main focus, with the Bank of England (BoE) and European Central Bank (ECB) set to announce their decisions on Thursday. Following last week’s UK inflation data, which showed the annual CPI rate for November 2025 falling to 2.4%, the market has fully priced in a 25 basis point interest rate cut from the BoE. Historically, we saw in the 2008 easing cycle that the initial rate cut can create volatility, but the market’s current focus is on the relative economic outlook.<\/p>\n
Given this backdrop, we are positioning for continued weakness in EUR\/GBP in the coming weeks. The options market reflects this sentiment, with one-month risk reversals showing a growing premium for EUR\/GBP puts, which means traders are paying more to bet on, or protect against, a fall in the pair. This suggests that strategies profiting from a lower EUR\/GBP exchange rate are favourable.<\/p>\n
Before the central bank meetings, we will be watching Wednesday’s inflation reports, especially the final Eurozone HICP figures. While the ECB is expected to hold interest rates steady, any surprise in the inflation data could shift expectations for their policy path in early 2026. The guidance offered by both the BoE and ECB on Thursday will be critical for confirming the trend of Sterling outperformance.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Euro weakens as UK wage growth supports Sterling; markets eye upcoming central bank decisions and inflation data.<\/p>\n","protected":false},"author":62,"featured_media":17034,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-36985","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36985","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=36985"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/36985\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17034"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=36985"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=36985"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=36985"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}