Pound Surges on Positive Employment Figures
A great start to the day for anyone exposed to purchasing euros and dollars, as the pound reaches fresh 2025 highs following this morning’s UK employment data release.
A strong set of employment figures has eased pressure on the Bank of England to cut interest rates next month, providing a boost to the pound. UK unemployment figures for December came in at 4.4%, below the market expectation and the Bank of England’s forecast of 4.5%.
Economic Outlook and Interest Rate Expectations
The latest data indicates a strong start to the year for the UK economy, but economists caution that the real test will come when the minimum wage hike and employer tax changes take effect.
With today’s figures reducing pressure on the Bank of England to cut rates next month, markets are now pricing in a higher likelihood that the next rate cut will occur in the second quarter.
Earlier this month, the Bank of England reduced interest rates by 25 basis points, with two voting committee members advocating a larger 50-point cut, assuming that economic conditions were deteriorating faster than expected.
European and US Data Releases
Elsewhere, French CPI figures have been released, meeting expectations at 1.8%.
Later in the morning, Germany’s ZEW business confidence figures are expected, followed by the US NY Fed Empire State Survey in the afternoon. These data releases will provide further insights into business sentiment and economic momentum across key markets.
For businesses looking to navigate currency fluctuations and capitalise on market opportunities, staying informed is crucial. If you’d like to understand how these trends could impact your business or explore strategies to manage market volatility, get in touch with our specialists today.