Pound weakens vs surging euro

The British pound rose against a broadly struggling dollar but fell against a stronger euro on Tuesday as latest economic data suggested the cost-of-living squeeze had not yet hit demand for staff in the UK.

Data showed Britain's unemployment rate holding at 3.8 per cent in the three months to May while the number of people in work rose by the most since the middle of 2021.

Sterling was up half a percent at $1.20120 against the dollar, but down 0.44 per cent against the euro at 85.245 pence .

The drop against the euro is due to that currency's strength. It rose to its highest against the dollar in almost two weeks on Tuesday on news that European Central Bank (ECB) policymakers would discuss whether to raise interest rates by 25 or 50 points at their meeting on Thursday.

"We're seeing some continuation of dollar downside that we saw on Friday and Monday, and equally today we're seeing some idiosyncratic euro upside, largely on anticipation of the fact that the ECB might hike more than 25 bps," said Vasileios Gkionakis, EMEA Head of CitiFX G10 Strategy.