Ella 
During early European trading on Tuesday, the euro-sterling cross fell to around 0.8540. The pair traded lower following recent mixed UK labor market data. Attention will turn to Germany’s August ZEW survey due later on Tuesday.
Figures published by the Office for National Statistics (ONS) on Tuesday showed that the UK ILO unemployment rate fell to 4.2% in the three months to June from 4.4% in the previous period. The figure was better than expectations of 4.5%. Meanwhile, July’s change in claims increased by 135,000, compared with a revised increase of 32,300 in June, well below the consensus estimate of 145,000.
UK pay inflation, measured by average earnings (excluding bonuses), climbed 5.4% month-on-month in June, compared with 5.7% in May, beating expectations of 4.6%. Average earnings, including bonuses, also grew 4.5% during the same period, compared with 5.7% growth for the full May quarter. Sterling attracted some buyers immediately after the UK jobs report was released.
On the other hand, expectations that the European Central Bank (ECB) will ease the cycle earlier than previously expected have weighed on the euro (EUR). Economists at Bloomberg say the European Central Bank may cut its deposit rate once a quarter until the end of next year. A Bloomberg survey of forecasters showed the benchmark rate is expected to reach 2.25% in December 2025, after six consecutive quarters of rate cuts. Previously, respondents expected this level to be reached in the second quarter of 2026.
