EUR/GBP drops towards 0.8800 on upbeat UK employment report, EU ZEW data eyed

• EUR/GBP extends the previous day’s pullback from three-week high.
• UK Claimant Count Change improved to 28.2K in March, ILO Unemployment Rate rose to 3.8% in three months to February.
• ECB policymakers’ indecision joins cautious mood ahead of EU/German ZEW data to prod EUR/GBP traders.

EUR/GBP takes offers to refresh intraday low near 0.8825 after upbeat UK jobs report during early Tuesday. Adding strength to the bearish bias is the latest indecision of the European Central Bank (ECB) policymakers, as well as the cautious mood ahead of the Eurozone and Germany’s ZEW Survey data for April.

UK’s latest Claimant Count Change rose to 28.2K in March, versus -11.8K expected and -11.2K prior, whereas the ILO Unemployment Rate rose to 3.8% during three months to February from 3.7% prior and market forecasts. Further, Average Earnings rose during the three months to February.

Also read: UK ILO Unemployment Rate rises to 3.8% in February vs. 3.7% expected

Given the latest firmer UK data, coupled with the Bank of England (BoE) policymakers’ readiness to keep the rates higher, the EUR/GBP pair bears the burden of the hawkish BoE bias due to the data.

On the other hand, ECB policymakers appear divided between the 25 basis points (bps) and 50 bps move. On Monday, ECB policymaker Martins Kazaks said, “The central bank has the option of 25 basis points (bps) or 50 bps move in May.”

Against this backdrop, S&P 500 Futures remain indecisive even as Wall Street closed with mild gains. That said, the US 10-year and two-year Treasury bond yields snap a three-day uptrend with mild losses around 3.60% and 4.18% by the press time.

Looking forward, EUR/GBP traders should pay attention to the Eurozone and Germany’s sentiment figures from the ZEW Survey for April as market sentiment dwindles ahead of the data and can allow the bloc’s currency to regain upside momentum.

Technical analysis

A daily closing beyond a 10-week-old descending resistance line, around 0.8850 at the latest, becomes necessary for the EUR/GBP bulls.