EU wage data in focus

Market reports
Thanim Islam
  • EUR to take cues from wage data
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With the US bank holiday, markets and volatility were very subdued yesterday. USD was net up amongst the G10, and GBP was lower across the board.


Market rates

*Daily move - against G10 rates at 7:30am, 20.02.24

** Indicative rates - interbank rates at 7:30am, 20.02.24

Table (74)

Data points

Table (75)


  • GBP: Governor Bailey

Our thoughts

The EUR will be in focus today with the release of the ECB survey of wage negotiations in Europe. This has been highlighted as one of the key factors for the ECB in deciding when to cut interest rates, and anything to suggest an earlier rate cut and/or a larger amount of rate cuts this year will likely cause EUR weakness. Markets are currently pricing the first rate cut for June this year, with a 44% probability of a cut in June, and currently 1% worth of cuts judged for the whole year.

Chart of the day

Interest rate differentials have favoured GBP over EUR, with the spread widening by 43 bps so far this year. Today's ECB wage survey could well widen this spread further should the numbers dictate less inflationary pressures. Then on Thursday we have February PMI numbers, as well as final CPI numbers for January. PMI activity in Europe has been in contraction for the last 8 months, indicating a slowing economy, whereas UK numbers have shown a rebound in activity. GBPEUR may well have further reasons for cheers, pending data to support the move.

20022024 cotd
Source: Bloomberg Finance L.P.

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