EUR/GBP was unfazed this morning by the release of UK labour figures. Wage growth excluding bonuses was slightly higher than expected. However, the month-on-month increase in private sector pay, which the Bank of England (BoE) closely monitors, was more subdued, ING’s FX analyst Francesco Pesole notes.

EUR/GBP is looking at some upside risks

“This figure has been fluctuating and follows a stronger reading previously. Unemployment figures have been rather unreliable, but there are still broad indications that the jobs market is cooling enough to reduce wage growth over the year ahead. The BoE’s recent CFO survey shows expected wage growth dropping below 4% in recent months. This doesn’t significantly alter the BoE’s outlook, with a February rate cut still our base case.”

“EUR/GBP is looking at some upside risks in the short term as markets can still price in more Bank of England easing and continue to embed idiosyncratic GBP risks related to higher borrowing rates. At the same time, as discussed above, the euro could see some tentative relief on Trump not targeting the EU with tariffs for now.”