EUR/GBP Consolidates Near 0.8730 Ahead of UK Employment, Eurozone Q3 GDP Data

• EUR/GBP trades back and forth near 0.8730 ahead of UK/Eurozone data.

• The Eurozone economy is seen contracting by 0.1% for the second time in a row.

• UK’s employment data will guide further action in the Pound Sterling.

The EUR/GBP pair trades directionless near 0.8730 as investors await crucial UK/Eurozone data. The cross struggles for action ahead of the Eurozone preliminary Q3 Gross Domestic Product (GDP) data, will demonstrate the impact of higher interest rates on economic activities.

According to the projections, the Eurozone economy registered de-growth by 0.1%. The economic activities in the Q2 were also contracted by 0.1%. The second straight decline in GDP data is characterized as a technical recession in an economy, which will force European Central Bank (ECB) policymakers to lean towards keeping interest rates unchanged in December.

More interest rates from the ECB are less likely but the ‘higher for longer’ interest rates narrative will remain intact. ECB President Christine Lagarde commented on Friday that higher interest rates for a long period would contribute to returning inflation to 2%.

On the Pound Sterling front, fears of an excessive slowdown in the UK economy have escalated as business investment fell significantly in Q3 due to higher interest rates by the Bank of England (BoE) and weak demand in domestic and overseas markets.

Meanwhile, investors await the UK employment data, which will be published at 07:00 GMT on Tuesday. As per the consensus, the Unemployment Rate in the three months ending September is seen unchanged at 4.2%. The Claimant Count Change for October rose by 15K, lower than 20.4K reading from September.

In addition to the UK employment, wage growth data will be keenly watched. Investors should note that stubborn wage growth in the UK economy is a major contributor to persistent price pressures.