The EUR/GBP cross gains some positive traction for the second straight day and rallies to a fresh daily high, around the 0.8725 region, during the early European session in reaction to disappointing UK jobs data.
The UK Office for National Statistics reported that the number of people claiming jobless benefits came in higher-than-expected, at 28.8K in January, while the Unemployment Rate rose to 5.2% during the three months to December. Adding to this, a measure of wage growth – Average Earnings Excluding Bonus – decelerated to 4.2% YoY, as expected, while the gauge including bonuses slowed to 4.2% from the former reading of 4.6%.
The data pointed to continued softening in the UK labour market at the start of 2026 and reaffirms market bets for a 25-basis-point (bps) interest rate cut by the Bank of England (BoE) in March. This, in turn, weighs heavily on the British Pound (GBP) and turns out to be a key factor pushing the EUR/GBP cross higher. The shared currency, on the other hand, moves little after the final German Consumer Price Index (CPI) matched the flash estimate and rose 2.1% YoY in January, which does little to influence the European Central Bank’s (ECB) policy outlook.
However, a gradual shift toward the possibility of a rate cut by the ECB might hold back the EUR bulls from placing aggressive bets and act as a headwind for the EUR/GBP cross. Nevertheless, the broader fundamental backdrop suggests that the path of least resistance for spot prices remains to the upside. Some follow-through buying beyond the monthly swing high, around the 0.8740 region touched last week, will reaffirm the constructive outlook and allow the currency pair to aim towards reclaiming the 0.8800 round figure for the first time since December 2025.
Economic Indicator
ILO Unemployment Rate (3M)
The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.
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Source: https://www.fxstreet.com/news/eur-gbp-rallies-to-08725-as-weak-uk-jobs-data-lifts-boe-rate-cut-bets-and-undermines-gbp-202602170733
