The EUR/GBP trades at 0.8505, marking a 0.30% loss in Tuesday's session.
The Sterling gained due to the report of strong UK labor market data.
German ZEW survey signals improved Eurozone expectations.
Markets are still betting that the BoE’s rate cut cycle will start later than the ECB’s.
In Tuesday's session, the EUR/GBP is seen at 0.8505, edging lower by 0.30% primarily influenced by robust UK labor market figures. Mixed macroeconomic signals from the German economy continue to shape the European Central Bank (ECB) while markets start to delay the start of the easing cycle for the Bank of England (BoE) to August.
In line with that, labor data on Tuesday showed that the UK wage growth remained sticky, while the Unemployment rate was seen declining to 3.8% in the three months ending in December. On the EUR side, the German ZEW survey showed mixed signals with the positive take being that the expectations index improved in January.
Regarding expectations, markets continue to bet on a more hawkish BoE as the resilience of the UK economy and the robustness of the labor markets justifies the delay of rate cuts. On the other hand uncertainty over the Eurozone’s economies makes markets think that the ECB will start the easing sooner. For the BoE, markets are betting for a first-rate cut in August while on the ECB’s side, in June.
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