Monday saw very little movement in the markets, with the dollar insubstantially up on the pound and the euro. The gains on the euro were under 0.1%, less than a cent in real terms. It’s gains on the pound were larger, around 0.2%, but still less than a cent.
The UK government announced on Monday that it would reverse its decision to cut the winter fuel payment benefit, which last year saw 7.5m pensioners go without the up-to-£300 benefit towards heating their homes. The reversal is going to cost £1.25bn and the government has yet to say how it will pay for it.
This morning brought the news that UK unemployment has increased for the second month running, climbing to 4.6% from last month’s 4.5%, itself the first increase in since November. It also means that unemployment is now at the highest level since August 2021, when the UK was coming down from the Covid peak.
There may be more movement tomorrow when Chancellor Rachel Reeves unveils her spending review. The package of government spending is expected to see billions invested into national infrastructure, such as £11.5bn toward the Sizewell C nuclear power plant. The scale of the spending may convince markets the UK is moving towards growth, although the fresh GDP figures due on Thursday may challenge that picture.
In recent months, the dollar has seen consistent falls, but on Monday it made small gains against both the pound and euro. Climbing 0.2% on the pound and less than 0.1% on the euro. With US inflation figures due out on Wednesday and the clock ticking on President Donald Trump’s tariff pause, the administration is racing to expand its trade agreement with China.
The euro saw minuscule losses against the dollar on Monday and a small 1.6% increase on the pound, but with no significant data releases due until national inflation rate announcements on Friday, the currency is at the mercy of other markets.
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