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The EUR/GBP cross pares gains near 0.8785 during the early European session on Tuesday. The Pound Sterling (GBP) recovers some lost ground against the Euro (EUR) after the UK employment data. Traders will keep an eye on the preliminary reading of HCOB Purchasing Managers Index (PMI) reports from the Eurozone, France and Germany, which are due later on Tuesday. The attention will shift to the European Central Bank (ECB) and Bank of England (BoE) interest rate decisions on Thursday. 

Data released by the UK Office for National Statistics on Tuesday showed that the country’s ILO Unemployment Rate rose to 5.1% in the three months to October, versus 5.0% prior. This figure came in line with the expectations during the reported period. 

Meanwhile, the Claimant Count Change increased by 20.1K in November versus a decline of 3.9K prior (revised from 29K). The Pound Sterling attracts some buyers in an immediate reaction to the upbeat UK employment report. However, the rising bets of a BoE rate cut might cap the upside for the GBP. 

The BoE’s Monetary Policy Committee (MPC) is widely anticipated to cut the base interest rate from the current 4.0% to 3.75% at its next meeting on Thursday. This would mark the first rate reduction since August and bring borrowing costs to their lowest level in nearly three years.

On the Euro’s front, markets widely expect the ECB to hold interest rates steady at their current levels at its December meeting on Thursday, continuing a pause in its easing cycle. Rising bets that the European Central Bank (ECB) is done cutting interest rates could support the EUR against the GBP in the near term. 

ECB Governing Council member Isabel Schnabel said that she was "rather comfortable" to see traders pencil in hikes, fueling expectations of possible ECB rate rises next year. Meanwhile, ECB policymaker Joachim Nagel stated that the current rates are in a "good place," reinforcing the consensus for a hold.

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