Unexpectedly strong US jobs data saw the dollar gain again on the pound and the euro. Meanwhile, poor UK industrial data saw GPB slip against EUR before recovering in the afternoon.
A report from S&P revealed UK construction has slowed, with its PMI falling to 53.3, the lowest in six months. Despite the Labour government’s stated aim of building 1.5 million homes over the next parliament, residential construction declined for the third month in a row.
The news of a weakening construction sector comes as UK long-term borrowing costs hit their highest level since 1998. If the high interest rates continue and the government cannot increase growth, the headroom Chancellor Rachel Reeves found in the last budget may be erased.
The big news out of the US on Tuesday was that job openings had increased by 259,000 to 8.01 million, significantly above the market’s 7.7 million. Though in a sign the American people still don’t believe their economy’s strength, resignations decreased by 218,000.
In Europe, a trove of inflation and unemployment data was in line with forecasts. Inflation in the eurozone rose for the third consecutive month to 2.4%, the highest rate since July. However, the unemployment rate held steady at 6.3%, a record low for the EU.
Later today, the US Federal Reserve will release the minutes of the December Federal Open Market Committee (FOMC) meeting where it decided a 25bps rate cut. The minutes will reveal the committee’s thinking, any hints of future rate cuts could create further market volatility.
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