The British Pound faces headwinds, trading near one-month lows against the dollar. New US tariffs, although lower than initially threatened, add to concerns for UK businesses. Meanwhile, domestic data reveals a softening UK labor market, increasing speculation about a potential interest rate cut by the Bank of England.
- Sterling remained little changed at $1.35 due to new US tariffs.
- A new 10% US tariff rate, while lower than the threatened 15%, still presents planning difficulties for UK businesses.
- The GBP/USD pair stays defensive below 1.3500 as the USD firms up.
- The ILO UK Unemployment Rate climbed to 5.2% in the three months to December.
- The number of people claiming jobless benefits rose to 28.8K in January.
- Average Earnings Excluding Bonus increased 4.2% in the three months ended December.
- Weakening UK labour data reinforces bets for a March interest rate cut by the Bank of England.
The convergence of factors points towards a period of vulnerability for the British Pound. US trade policies create external pressures, while domestic economic indicators suggest potential easing by the central bank. The combined effect could lead to further depreciation of the currency, at least in the short term, as markets adjust to these new realities.