The dollar saw significant losses against the pound and euro on Tuesday, losing more than 0.5% against the pound and nearly 0.6% against the dollar. This is despite a dreadful economic sentiment report out of Europe.
UK unemployment figures showed the number of jobless remained stable in the three months leading up to June, following rises in April and March. This may be a sign that the impact of last autumn’s budget, which saw increases to employers’ national insurance contributions, has now been accounted for.
There are no major data releases in the UK today, though tomorrow will see fresh GDP figures published. Last month, the Office for National Statistics registered a contraction in the country’s growth figures, but analysts predict tomorrow’s numbers will reveal a 0.1% growth.
With the dollar declining in value against most currencies, it appears the pound and euro didn’t so much gain as stayed level while the dollar fell.
The source for the dollar’s fall seems to be yesterday’s data, which showed US inflation holding steady at 2.7%.
Economists have been on the edge of their seats waiting to see the impact of Trump’s tariffs, with many claiming a steep rise in inflation was coming. Flat inflation puts more pressure on the Federal Reserve to make an interest rate next month, so traders may be looking to put their money in something more lucrative than the dollar.
The euro remained level as the dollar fell. This was despite an economic survey out of Germany showing expectations for market growth plunging.
The ZEW Economic Sentiment Index tracks how Germans feel their economy is doing. Yesterday’s publication shows a dramatic fall from July’s 52.7 to this month’s 34.7, the first decrease in four months.
This is the first survey since the EU’s trade agreement with the US, which is regarded by key European figures as a buckling to US pressure.
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