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The pound turned higher still over the euro on Monday.
Sterling continued to set fresh records against the euro to start the new week. GBP/EUR’s latest half-cent increase put it within touching distance of its March 2022 peak and means the pound has now strengthened by almost six cents against the euro since the start of the year. That momentum was dealt a blow this morning on the news that UK unemployment was at its highest level since May.
Much of the recent bounce has come as a result of the US election, particularly the assumption that Donald Trump’s much-discussed tariffs would harm the euro and be a boost for the US dollar. Unsurprisingly, Monday was a good day for the US dollar, which is now near its highest against the pound in three months and the euro in almost seven months.
This morning, the UK’s September unemployment report came in at 4.3% in September. That was well above the forecast 4.1% and may have a dampening effect on the pound as markets worry the impact of high interest rates is being felt more painfully among the work force. GBP/EUR and GBP/USD both lost half a cent as the news fed through.
As so often happens on quieter days, the lack of economic news allowed attention to wander towards thematic worries. Germany’s recent political troubles continue to spook markets and drain investment away from the single currency and towards the safe-haven US dollar. Sterling started solidly enough but slipped against the US dollar ahead of Friday’s key GDP release.
It was no coincidence that Sir Keir Starmer was in Paris to begin the week. Although his visit was officially tabbed to mark Remembrance Day, the image of European leaders uniting ahead of Donald Trump’s inauguration was a potent symbolic reminder of the close economic relationship between the UK and the continent. Those ties may well prove invaluable should Trump’s tariffs be as disruptive as many fear they will.
In wider markets, cryptocurrencies and Tesla continue their post-election surge while gold is coming under pressure. On Monday, the price of gold fell towards $2600 per Troy ounce after heavy losses sustained last week.
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GBP: GDP threatens record year
The pound is just a few weeks away from officially becoming the best performing major currency of 2024. Its progress has been particularly stark against the euro but a number of key data sets (plus a last Bank of England meeting) put those gains at risk.
GBP/USD: the past year
EUR: Germany seeks stability
After turmoil in Berlin, the euro needs some sign of strength from its economic juggernaught. Today’s ZEW economic sentiment index is its chance to provide that, although markets predict a further demoralising fall in that metric.
GBP/EUR: the past year
USD: Lapping up Trump trades
American markets fell silent yesterday to mark Veterans Day. Such is the US dollar’s current strength that interest from the rest of the world is enough to make up for a lack of domestic trades. Since last Tuesday, the US dollar has picked up a cent and a half against the pound and double that against the euro.
EUR/USD: the past year
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