This morning’s UK employment data painted a concerning picture, adding pressure to an already fragile economic outlook. As the UK braces for the impact of US tariffs, job market weakness in February and March has raised fresh concerns for the Bank of England.
Despite decent wage growth, the underlying employment figures suggest a cooling labour market — a worrying signal just as businesses digest both fiscal changes and external trade risks.
BoE Watches Employment Closely
The Bank of England will be watching closely. Recent business surveys already flagged a post-Budget drop in employment, and this month’s national living wage increase adds another layer of complexity for employers.
Balancing wage growth with weakening hiring momentum presents a policy dilemma as the BoE continues to navigate inflation pressures and a slowing economy.
CPI Data Up Next: Will Inflation Ease?
Attention now turns to tomorrow’s UK CPI release. So far this year, inflation has shown signs of stickiness, particularly in the core rate, which has hovered around 3.5%.
- Headline CPI is expected to dip to 2.7% (from 2.8%)
- Core CPI is forecast to hold steady at 3.5%
Any surprises here could influence Sterling and expectations for future BoE action.
ECB Meeting Looms on Thursday
On Thursday, the spotlight shifts to the European Central Bank, where markets are anticipating a further 25-basis-point rate cut — despite the tricky backdrop of rising inflation risks and falling growth.
In March, the ECB already dropped interest rates for the second consecutive month, bringing the deposit rate to 2.5%. A further cut this week would lower it again to 2.25%, reinforcing the bank’s commitment to easing — even amid tariff-driven uncertainty.
Volatility Brings Opportunity
As central banks reassess their paths and tariff impacts ripple across Europe and beyond, volatility is likely to persist in currency markets. Whether you’re buying goods in Europe or paying staff overseas, exchange rate movements could affect your margins.
Qumoney’s FX experts are ready to help you understand what today’s data means for your business and how to respond effectively.
Get in touch now for bespoke currency solutions and market insights.