The strong wage growth and joint-highest rate of employment on record provided an upswing of support for Sterling, but a cut back in hiring suggested employers were still nervous about the looming Brexit deadline. Looking ahead, the single currency will remain under pressure ahead of the European Central Bank’s (ECB) interest rate decision which is due on Thursday.
While the bank is expected to ease monetary policy, Germany’s plan to jump-start its own ailing economy by establishing independent public agencies offered the euro a temporary shot in the arm.
On Tuesday, Finance Minister Olaf Scholz said the country is ready to pump “many, many billions of euros” into the economy to prevent any significant slowdown in growth.
Speaking to lawmakers in the lower house of parliament, Mr Scholz said:
“It will be very important for us as the largest economy in the middle of the European Union, whether we are actually able to counteract a negative economic trend.
“With the solid financial foundations we have today, we are in a position to counter an economic crisis with many, many billions of euros, if one actually breaks out in Germany and Europe.”
This news provided the euro with a slight upswing of support as markets revised their expectations for an imminent rate cut.
David Madden, an analyst at CMC Markets, predicted a quiet period: “We’re going to have traders sitting on their hands between now and Thursday when the ECB [make] their announcement.”
However, if ECB President Mario Draghi unexpectedly slashes rates or signals rates could be dragged into negative territory in the near-term, the single currency could plummet.