European session review: GBP appreciates after the release of UK labour market data

GBP appreciated against its major rivals after the UK's employment data indicated that the labor market remained strong despite sluggish economic growth. The Office for National Statistics (ONS) reported the UK employment rate increased by 0.6 percentage points annually to a record 76.3 percent in three months to November, while the unemployment rate remained at 3.8 percent, matching economists' forecast. Meanwhile, average earnings including bonus surged 3.2 percent y/y during three months to November, while that excluding bonus climbed 3.4 percent y/y. Economists had expected the average earnings to rise 3.1% y/y in three months to November. In addition, the claimant count rose slightly to 3.5 percent in December from 3.4 percent in November. The data undermined the case for a Bank of England (BoE) interest rate cut next week.

EUR rose against most major counterparts, following the release of Germany's ZEW economic confidence survey results, which showed that German economic confidence strengthened to the highest level since 2015. According to the survey, the Indicator of Economic Sentiment for Germany came in at 26.7 points in January, 16.0 points higher than in the previous month. That was the highest value since July 2015. Economists had expected an increase to 15.0. The assessment of the economic situation in Germany has also improved considerably in the current survey, with the corresponding indicator climbing to a level of minus 9.5 points, 10.4 points higher than in December.

USD traded mixed against other major currencies. Market participants digested the speech of U.S. President Donald Trump at the World Economic Forum (WEF) in Davos. He boasted that the U.S. is "in the midst of an economic boom, the likes of which the world has never seen before", but criticized the Fed that it had raised rates too fast and lowered them too slowly. He also said that negotiations with China on a Phase Two trade deal would begin shortly, and added that most of the tariffs on Chinese goods would remain in place until a formal agreement is reached.