After boosts to the dollar on Monday driven by the news of an easing of tariffs with China, the currency slipped back on Tuesday. The pound and euro, which were neck-and-neck by day’s end, both gained more than 0.7% on USD.
The main news out of the UK on Tuesday was a data release from the Office for National Statistics showing increased unemployment, fewer job openings, and a softening on pay rises. None of which paint a rosy picture ahead of the GDP figures due to be published on Thursday.
However, even with this diminished job market, the Bank of England’s chief economist Huw Pill said that inflation may remain too high for the Monetary Policy Committee to vote through interest rate cuts in the future.
US inflation numbers published on Tuesday showed that, despite President Donald Trump’s tariffs, annual inflation had lowered by 0.1% from March’s 2.4%. However, analysts were quick to point out that, while these numbers cover the month when tariffs were implemented, they won’t yet show the impact of that shock to the market.
Following the tariff agreement with China on Monday, investment in US stocks continued throughout Tuesday, and the S&P 500’s 2025 losses have been reversed.
New data from the Centre for European Economic Research shows a huge swing in German economic sentiment. In April, the institute recorded a near two-year low in its survey for German industrial leaders. This month, that low of -14 has jumped by nearly 40 points to 25.2, way above forecasts of 11.9. The swing was driven by the recent interest rate cut and the reduction of the previous month’s US tariffs.
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