While the dollar regained some lost ground on the pound at the end of last week, overall, the USD’s decline continues. The pound was also slightly up on the euro at the end of last week, potentially an impact of the European Central Bank’s interest rate cut.
There are three important pieces of data coming this week for the UK: unemployment figures, house prices and monthly GDP numbers.
On Tuesday, new unemployment figures will reveal if the April budget, which saw employer national insurance contributions increase, has led to layoffs. May saw an increase in unemployment for the first time in four months, and June’s data may continue the trend.
Then, on Thursday, RICS house price data will show what impact the increase on stamp duty has had on the markets. New GDP data will also reveal if last month’s above-expected growth was a one-off bump or a trend.
With Chancellor Rachel Reeves publishing the details of her spending review on Wednesday, this week also shows how the government plans to expand or cut services in the coming years.
Last week was filled with data releases for the US, and none of it was a ringing endorsement of the direction of President Donald Trump’s economy.
The Manufacturing and services industries both showed reduced orders and the number of new people on payroll, while still up, was a softer gain than the previous month’s figures. These diminished numbers indicate a slowdown across the board. Trump’s response was to call on the Fed to cut interest rates by a full percentage point.
You can see the slowdown reflected in the dollar exchange rate, which has broadly fallen against the pound and euro since Trump took office. It’s down nearly 2% against the pound in the last month alone, meaning you get two cents more for every pound than you did at the start of May.
Wednesday sees the release of new inflation figures. These will be a strong marker of the impact of Trump’s tariff policy, as it will show if increased import duties are being passed onto consumers with higher prices.
Following the European Central Bank’s interest rate cut last week and the news that the Eurozone had brought inflation down under its 2% target, there is little new data due this week that could upset the markets. However, it does mean the euro is somewhat at the mercy or movements in the US, where Trump is mulling further changes to his international tariff policies.
