The UK’s headline unemployment rate increased slightly to 5.2% in the three months to December, slightly exceeding market forecasts and marking the highest jobless rate in almost five years. Average earnings meanwhile fell to 4.2% (both when excluding and including bonuses) and are now running at close to half the peak set in the summer of 2023. The pound came under pressure in early trading after the news broke.
Those were just the first bits of data that could impact sterling this week. Tomorrow’s inflation report looks likely to be a highly significant one, particularly if the big drop in the headline number to somewhere around 3% does in fact come to pass. A miss either side of that number would likely cause the pound to shoot up or down, depending on how it affects the timeline for the Bank of England.
Monday was a comparatively quiet day for currency traders due to the public holiday in the United States. Sterling slipped slightly against the US dollar ahead of those key data points, but the pound to euro rate remained largely unchanged amid thin volumes.
UK consumers were decidedly gloomy this month, according to new research by S&P. It wasn’t just the dismal weather: households were worried about debt and shied away from major purchases as the strain on disposal income continued.
Sir Keir Starmer has backed down on the government’s plan to delay 30 votes at the May local elections. That came after a legal challenge from Nigel Farage’s Reform UK, which is well placed to be the big winner of the vote.
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