EUR/GBP attracts some sellers near the 0.8700 mark after UK employment data, Eurozone, UK PMI data eyed

• EUR/GBP cross hovers around 0.8700 following the UK employment data.
• The UK ILO Unemployment Rate fell to 4.2% (3M) in August vs. 4.3% prior, better than expected.
• The preliminary Eurozone Consumer Confidence arrived at -17.9 in October vs. -17.8 prior.
• Market players await the European Central Bank rate decision on Wednesday, with no change in rates expected.

The EUR/GBP cross remains under pressure around the 0.8700 psychological mark during the early European session on Tuesday. The latest UK employment data showed mixed results. Market players will monitor the economic data releases from both the Eurozone and the UK for fresh impetus ahead of the European Central Bank (ECB) rate decision on Wednesday.

The UK ILO Unemployment Rate fell to 4.2% in the quarter to August, versus 4.3% seen in the previous reading. These figures came in better than the market expectation of 4.3%, according to data published by the Office for National Statistics (ONS) on Tuesday. Additionally, the number of people claiming jobless benefits climbed by 20.4K in September from the previous month’s 0.9K increase and 2.3K expected. Finally, the British Employment Change for August came in at -82K versus -207K recorded in July, above the market consensus of -198K.

There is speculation that the Bank of England (BoE) might maintain interest rates steady at 5.25% in its November meeting due to the weaker-than-expected data. It’s worth noting that the UK Manufacturing PMI remained below the 50.0 threshold while Retail Sales contracted, suggesting sluggish economic activity in the UK economy.

On the Euro front, the preliminary Eurozone Consumer Confidence for October came in at -17.9 from the previous reading of -17.8. These figures arrived better than the market consensus -18.3, data published by the European Commission showed on Monday. Investors will keep an eye on the European Central Bank (ECB) Interest Rate decision on Wednesday, which is expected to remain unchanged at 5%. ECB President Christine Lagarde may stick with the high-for-longer mantra but is likely to push back against rate-cut speculation due to a weakening economy. 

Furthermore, the escalating geopolitical tensions in the Middle East push energy prices higher, which exerts some pressure on the Euro (EUR). On Monday, Reuters reported that the European Union is considering extending an emergency gas price cap imposed in February, amid concerns that the Middle East crisis and sabotage of a Baltic pipeline could push prices up again this winter. That being said, the fear of the Eurozone energy crisis acts as a headwind for the EUR/GBP cross.

Market players await the preliminary German and Eurozone HCOB PMI for October, due later in the European session on Tuesday. Also, the UK S&P Global/CIPS PMI data will be released. Traders will take cues from these reports ahead of the ECB monetary policy meeting on Wednesday.

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