Pound Sterling has fallen against both the Euro and US Dollar over the past 24 hours as markets have digested what seems to be a lack of confidence from investors in The UK’s economic outlook. Bond yields in The UK actually rose yesterday which is usually deemed positive, however with Rachel Reeves having faced a tough PM Questions yesterday around our debt trajectory, The Pound has suffered off the back of it.
Earlier in the week, Sir Keir Starmer was forced to abandon changes to the welfare system which would have eventually resulted in savings of £5 billion. The fact that these savings now can’t be generated simply points to the unwelcome fact that The UK’s debt is now more likely to move to uncertain territory which is inadvertently made investors concerned about whether The UK remains a safe bet moving forward.
The result of the above means that the chancellor now has no real choice other than to raise taxes later in the year which again will come as a damaging move and bring into question how the economy can and will cope. Potentially weighing further on The Pound.
Moving into this afternoon, we have the monthly release of Non-Farm Payrolls in The U.S. A day earlier than usual due to Independence Day in The U.S tomorrow. The figure suggests 29,000 less jobs will have been created last month but volatility around this figure is always expected. More importantly however, ADP Employment figures released yesterday actually bottomed out to their lowest level since March 2023 and worryingly is now becoming more of a trend than what The Federal Reserve would like to see, taking into consideration the pressure they are under from Trump to cut interest rates.
GBP/EUR 1.1569 GBP/USD 1.3660 GBP/AED 5.0192
GBP/AUD 2.0759 GBP/CHF 1.0809 GBP/CAD 1.8574
GBP/NZD 2.2475 EUR/USD 1.1790 GBP/ZAR 23.9212