GBP/USD held its ground above 1.2600 during European trading on Tuesday, reflecting a broader pattern of market stability amid a fresh wave of selling pressure on the US Dollar. The markets seemed to maintain a cautious stance, primarily driven by ongoing concerns over potential trade wars. Investors are keenly observing upcoming speeches and data releases for signs of market direction.
Currency traders are directing their attention towards the Bank of England's Chief Economist Pill's upcoming speech and the release of US Consumer Confidence data, both anticipated to provide further impetus to market movements. Meanwhile, EUR/USD traded in a narrow range, staying below 1.0500 on Tuesday. This trend indicates a relatively subdued reaction to economic developments in the Eurozone, which includes key players such as Germany, France, Italy, Spain, and others.
The European Central Bank (ECB) released its latest data on the Euro area's negotiated wages, showing a year-on-year growth of 4.12% in the fourth quarter (Q4) of 2024. This represents a slowdown compared to the third quarter's rate of 5.43%. Despite this deceleration, the data had little impact on the Euro's performance in currency markets. Notably, EUR/USD remained modestly flat around 1.0470 as of the time of writing.
The indicator provided by the ECB is computed from a select group of nine countries within the Euro area. These countries include Germany, France, Italy, Spain, the Netherlands, Belgium, Finland, Austria, and Portugal. The calculation of this indicator relies on non-harmonized country data and includes both monthly and quarterly time series. It reflects negotiated monthly earnings and is considered a critical measure for assessing wage trends within the Eurozone.
Despite the cooling in negotiated wage growth, the Euro struggled against other major currencies, particularly showing weakness against the Swiss Franc. The limited movement of the EUR/USD pair highlights the cautious approach investors are taking in light of current economic uncertainties and geopolitical tensions.