The British pound is trading near one-month lows around $1.30 as market participants grapple with the implications of trade tensions and recently released economic data. An initial positive reaction to a reduction in US-China tariffs was short-lived, and domestic data revealed a rise in unemployment and slowing wage growth.
- The British pound hovered around $1.30, near one-month lows.
- Optimism over a 90-day reduction in US-China tariffs faded.
- The UK unemployment rate rose to a 2021 high of 4.5%.
- Businesses cut jobs for a third consecutive month.
- Wage growth slowed but remained above 3%.
- The data slightly increased market expectations for additional rate cuts by the Bank of England.
- The central bank lowered borrowing costs by 25bps last week.
The current economic climate presents challenges for the British pound. Trade uncertainties coupled with rising unemployment and slowing wage growth domestically create a less favorable environment for the currency. The increased possibility of future interest rate cuts by the central bank further weighs on the pound’s outlook, suggesting potential for continued downward pressure.