The pound fell back slightly from recent highs against its peers, falling by around a third of a per cent against the euro and the US dollar. The US dollar also rebounded against the euro, with EUR/USD falling by roughly the same margin.
The UK unemployment rate increased slightly in January, from 3.8% the month prior to 3.9%. That rise had been expected, however, although small, it serves as a reminder of the real-world impact of interest rates on the economy.
Meanwhile, average earnings in the UK fell over a three-month period, with that metric down when bonuses are included or excluded. Average earnings excluding bonuses are now at 6.1%, down from last year’s highs but still well above historical trends.
The key event for those with a vested interest in sterling comes tomorrow with UK GDP. Economists are forecasting monthly growth to return to positive territory in January, but not by a sufficient margin to haul the UK out of a technical recession, which is measured by a three-month average of GDP.
February’s KPMG and REC UK jobs survey reported the smallest monthly increase in starting salaries for almost three years. After a relatively low key budget, businesses seem to think that investment has to increase for the UK labour market to really turn the corner. Here’s what Jon Holt, chief executive and senior partner of KPMG in the UK had to say about the report:
“The impasse between economic uncertainty and hiring decisions continued into February. Chief Executives tell me they are ready to invest and grow – including taking on new staff – yet the reality is they’re being held back by the prospect of weak demand.” Tomorrow provides the next datapoint for all those keen to track the UK’s growth.
Today, however, is also a big day for macro data. US inflation headlines the afternoon’s session, which will no doubt give febrile markets a chance to jump up and down as they continue their endless game of second-guessing the Federal Reserve. On Wall Street, the Nasdaq and the S&P 500 stock indexes fell back slightly ahead of the release.
The UK’s Financial Conduct Authority (FCA) has given the green light to crypto-linked securities, mirroring a similar decision from the USA’s SEC. This means that bitcoin and ethereum-backed indexes could be available to retail investors on the London Stock Exchange. The decision caused the price of bitcoin to zoom to new highs, briefly touching $72,000.
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