The euro rebounded slightly against the pound, supported by a weak UK job market and rising political risks.
2026-05-19 14:49:58
The euro maintained a modest rise against the pound in European trading on Tuesday, fluctuating around 0.8680. The pair had previously seen a significant pullback from a high of 0.8730, but following the release of the latest UK employment data, the market resumed buying of the euro against the pound, indicating continued caution regarding the pound's prospects.
Data released by the UK Office for National Statistics showed that the UK's ILO unemployment rate unexpectedly rose to 5% in the three months to March, up from the previous level of 4.9%. This recent high in unemployment indicates a further intensification of the cooling labor market trend . Meanwhile, the number of people claiming unemployment benefits increased by approximately 26,500 in April, slightly lower than the market expectation of 27,300, but previous figures had been significantly revised downwards, leaving the overall job market performance still weak.
Following the release of the employment data, the pound did not experience a significant short-term decline, but its overall rebound momentum remained limited. The market believes that the continued cooling of the UK labor market may impact consumer spending and economic growth, increasing pressure on the Bank of England to adjust its future policies.
Furthermore, escalating domestic political risks in the UK have further limited the pound's performance. Prime Minister Keir Starmer is facing increasing pressure from within his own party, and market concerns about leadership stability are growing. The former Health Secretary's public statements indicating a willingness to push for a leadership change have exacerbated market uncertainty about the UK's political future.
Political risks and fiscal concerns in the UK are eroding international investor confidence in British assets . The recent sharp rise in UK government bond yields reflects lingering market anxieties about the fiscal deficit and government stability.
In contrast, the euro continues to be supported by the European Central Bank's hawkish stance. ECB Governing Council member Yannis Stournaras recently stated that moderate interest rate hikes would still help curb inflation without causing serious damage to the economy. This statement reinforced market expectations that the ECB would maintain its tightening policy and provided support for the euro.
Market analysts say that current interest rate expectations in the Eurozone are relatively stable, while political and economic risks in the UK continue to weigh on the pound's performance.
From a technical perspective, the EUR/GBP pair maintains a slightly bullish, oscillating structure on the daily chart. After a previous pullback, the exchange rate regained buying support and is currently trading above the 20-day and 50-day moving averages, indicating a continued bullish trend in the short to medium term. The Relative Strength Index (RSI) is currently around 56, showing a slight slowdown in bullish momentum, but it remains in a relatively strong zone overall. While the MACD indicator has shown a short-term correction, the bullish structure has not been completely broken.
Current technical indicators suggest that initial resistance for the euro against the pound is around 0.8730, which also coincides with a significant high since April. A successful break above this level could lead to further gains towards 0.8780 and even the psychological level of 0.8800.
Support lies around 0.8650, with further key support at the 0.8620 area. A break below this area could signal a correction in the short-term uptrend.
From a 4-hour chart perspective, the euro/pound pair has shown signs of stabilizing after its previous rapid pullback, with short-term moving averages beginning to turn upwards again. The MACD indicator is gradually forming a golden cross, indicating that short-term buying power is recovering, while the RSI has risen back above 50, reflecting improved market sentiment.
Overall, the current euro/pound exchange rate is still driven by weak UK economic data, UK political risks, and expectations surrounding European Central Bank policy. In the short term, the market will continue to focus on UK economic performance, speeches by European Central Bank officials, and changes in the global bond market.
Editor's Summary : The euro/pound exchange rate currently maintains a relatively strong structure, primarily due to the continued weakening of the pound's appeal caused by both economic and political uncertainties in the UK, while the European Central Bank's relatively hawkish policy stance provides support for the euro. Although the exchange rate has experienced a short-term technical correction, overall market sentiment remains inclined to buy the euro on dips. Looking ahead, as long as there is no significant improvement in UK political risks and the weak labor market, the euro/pound exchange rate is likely to maintain a high-level consolidation pattern. However, if subsequent Eurozone economic data shows a significant slowdown, it could limit further upside potential for the euro.
Data released by the UK Office for National Statistics showed that the UK's ILO unemployment rate unexpectedly rose to 5% in the three months to March, up from the previous level of 4.9%. This recent high in unemployment indicates a further intensification of the cooling labor market trend . Meanwhile, the number of people claiming unemployment benefits increased by approximately 26,500 in April, slightly lower than the market expectation of 27,300, but previous figures had been significantly revised downwards, leaving the overall job market performance still weak.
Following the release of the employment data, the pound did not experience a significant short-term decline, but its overall rebound momentum remained limited. The market believes that the continued cooling of the UK labor market may impact consumer spending and economic growth, increasing pressure on the Bank of England to adjust its future policies.
Furthermore, escalating domestic political risks in the UK have further limited the pound's performance. Prime Minister Keir Starmer is facing increasing pressure from within his own party, and market concerns about leadership stability are growing. The former Health Secretary's public statements indicating a willingness to push for a leadership change have exacerbated market uncertainty about the UK's political future.
Political risks and fiscal concerns in the UK are eroding international investor confidence in British assets . The recent sharp rise in UK government bond yields reflects lingering market anxieties about the fiscal deficit and government stability.
In contrast, the euro continues to be supported by the European Central Bank's hawkish stance. ECB Governing Council member Yannis Stournaras recently stated that moderate interest rate hikes would still help curb inflation without causing serious damage to the economy. This statement reinforced market expectations that the ECB would maintain its tightening policy and provided support for the euro.
Market analysts say that current interest rate expectations in the Eurozone are relatively stable, while political and economic risks in the UK continue to weigh on the pound's performance.
From a technical perspective, the EUR/GBP pair maintains a slightly bullish, oscillating structure on the daily chart. After a previous pullback, the exchange rate regained buying support and is currently trading above the 20-day and 50-day moving averages, indicating a continued bullish trend in the short to medium term. The Relative Strength Index (RSI) is currently around 56, showing a slight slowdown in bullish momentum, but it remains in a relatively strong zone overall. While the MACD indicator has shown a short-term correction, the bullish structure has not been completely broken.
Current technical indicators suggest that initial resistance for the euro against the pound is around 0.8730, which also coincides with a significant high since April. A successful break above this level could lead to further gains towards 0.8780 and even the psychological level of 0.8800.
Support lies around 0.8650, with further key support at the 0.8620 area. A break below this area could signal a correction in the short-term uptrend.
From a 4-hour chart perspective, the euro/pound pair has shown signs of stabilizing after its previous rapid pullback, with short-term moving averages beginning to turn upwards again. The MACD indicator is gradually forming a golden cross, indicating that short-term buying power is recovering, while the RSI has risen back above 50, reflecting improved market sentiment.
Overall, the current euro/pound exchange rate is still driven by weak UK economic data, UK political risks, and expectations surrounding European Central Bank policy. In the short term, the market will continue to focus on UK economic performance, speeches by European Central Bank officials, and changes in the global bond market.
Editor's Summary : The euro/pound exchange rate currently maintains a relatively strong structure, primarily due to the continued weakening of the pound's appeal caused by both economic and political uncertainties in the UK, while the European Central Bank's relatively hawkish policy stance provides support for the euro. Although the exchange rate has experienced a short-term technical correction, overall market sentiment remains inclined to buy the euro on dips. Looking ahead, as long as there is no significant improvement in UK political risks and the weak labor market, the euro/pound exchange rate is likely to maintain a high-level consolidation pattern. However, if subsequent Eurozone economic data shows a significant slowdown, it could limit further upside potential for the euro.
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