EUR/GBP eases below 0.8550 after surprise drop in UK jobless rate

• EUR/GBP is losing momentum around 0.8540 in the European session on Tuesday, down 0.20% on the day.
• UK unemployment rate fell to 4.2% in three months to June; Change in number of claimants reached 135K in July.
• Bloomberg economists expect the ECB to cut its deposit rate once a quarter by the end of next year.

The EUR/GBP cross is losing traction near 0.8540 during the European session on Tuesday. Cross-cutting margins fall after recent mixed UK labor market data. Attention will turn to Germany’s August ZEW poll later on Tuesday.

Data published by the Office for National Statistics (ONS) on Tuesday showed that the UK’s ILO unemployment rate fell to 4.2% in the three months to June, from 4.4% in the previous period. That figure came in better than expectations of 4.5 percent. Meanwhile, the change in claimants rose 135k in July, compared to a revised gain of 32.3k in June, below the market consensus of 14.5k by a wide margin.

UK wage inflation, as measured by average earnings excluding bonuses, rose 5.4% to 3 million in June from 5.7% in May, beating estimates of a 4.6% increase. Average earnings, including bonuses, also rose 4.5% in the same period, compared with 5.7% in the May quarter. Sterling draws some buyers in an immediate reaction to the UK jobs report.

On the other hand, expectations that the European Central Bank (ECB) will ease the cycle earlier than previously expected are weighing on the euro (EUR). According to Bloomberg economists, the ECB is likely to cut its deposit rate once a quarter until the end of next year. A Bloomberg survey of forecasters indicated the benchmark would reach 2.25 percent in December 2025 after six consecutive quarter-point cuts. Previously, respondents estimated that this level would be reached in the second quarter of 2026.