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UK unemployment increased to 4.4% in November. Editorial credit: Pio3, via Shutterstock.
Unemployment in the UK advanced slightly to 4.4% in November from 4.3% the month prior. Average earnings, both with and without additional bonuses, increased by 5.6% in the three months to November, slightly more than had been expected. The pound was little changed against its rivals after the release but that could change as things develop today.
Yesterday marked the inauguration of the 47th president of the United States, Donald Trump. Despite picking up his pen to sign an unusually large barrage of executive orders, the president stopped short of immediately imposing trade tariffs on Canada, Mexico and Europe. This helped ease pressure on several global currencies and caused the US dollar to fall by more than 1% against the pound and the euro.
When we say those executive orders were abnormal, allow us to provide some context. In the post-WWII era, US presidents have signed an average of 59 executive orders per year. Trump meanwhile targeted hundreds of orders in one day, and while it may take some time to record the precise number, he is widely reported to have exceeded 100.
When combined with some of the rhetoric of the campaign trail, this highlights the very real risk that Trump’s second term will become one of top-down government by decree. If Trump were to circumvent the usual legislative mechanics, currency markets would in theory be exposed to rapidly changing US policy and a good deal more volatility. You can read more about these risks in our latest Quarterly Forecast.
Markets were quiet yesterday aside from the focus on the inauguration. The euro must today navigate the German ZEW economic sentiment index, which is forecast to have dipped slightly to open 2025.
The consumer mood has taken a fall to begin 2025, according to S&P’s UK sentiment index. The survey of 1500 British households came in at a twelve-month low in January as financial wellbeing fell and respondents highlighted increased worry about personal debt.
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GBP: Holding off a stronger euro
Sterling managed to limit its losses to under 0.3% against the euro yesterday but not without some difficulty. The euro is building up some nice momentum as the pound continues to struggle against forecast interest rate cuts and weak growth.
GBP/USD: the past year
EUR: A temporary reprieve?
EUR/USD climbed to a two-week high yesterday as reports of Trump’s tariff pullback brought relief for the single currency. While he may not have signed anything on Day 1, the euro’s short-term future will very much rest on US trade policy – specifically whether the new president decides to implement tariffs.
GBP/EUR: the past year
USD: Welcome to the Trump show
With US markets closed to mark MLK day, the US dollar was on the wrong end of some surprising restraint from the new president. As mentioned above, investors would be wise to strap themselves in for the next few years under a more powerful and unpredictable leader than in 2017.
EUR/USD: the past year
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