Yesterday marked President Trump’s inauguration, a highly anticipated event that has already begun to influence global markets. His return to the White House has reinvigorated discussions around U.S. fiscal policy, trade agreements, and potential shifts in geopolitical dynamics—all of which hold significant implications for the U.S. Dollar (USD). Meanwhile, today’s UK employment figures have added to the ongoing narrative around Sterling’s performance, painting a mixed picture for the currency.
Trump’s Inauguration and USD Movement
President Trump’s inauguration speech reinforced his stance on economic nationalism, emphasizing domestic investment and a potential return to his signature trade policies. Markets are now bracing for the impact of any executive orders or policy announcements in the coming days.
The immediate reaction saw the U.S. Dollar strengthen slightly against both Sterling and the Euro, as investors weighed the potential for renewed fiscal stimulus and infrastructure spending. However, uncertainties around trade tariffs and global relations have tempered any significant rallies. USD pairs like GBPUSD and EURUSD may remain volatile as the week progresses, depending on concrete policy moves.
UK Employment Data and the Pound
This morning, the UK’s employment data revealed:
- Unemployment Rate: Increased slightly to 4.4%, reflecting a softening labor market.
- Average Earnings (Excluding Bonuses): Rose by 5.5%, signaling that wage growth continues to outpace inflation.
The data presents a mixed outlook for Sterling. While rising wages are a positive indicator for households, the uptick in unemployment adds to concerns about the UK’s economic resilience amid broader economic challenges. This has placed additional pressure on the Pound, which continues to struggle against both the Dollar and the Euro.
Market Reactions
- GBPUSD: The pair edged lower following the employment data release, as concerns about rising unemployment outweighed the positives of wage growth. Coupled with USD strength post-inauguration, GBPUSD is currently trading near 1.21, with potential for further downside if U.S. policy clarity boosts the Dollar.
- GBPEUR: The Pound also weakened against the Euro, trading around 1.18. The absence of significant Eurozone data this week leaves Sterling’s direction more vulnerable to UK-specific factors.
Outlook
Markets are now closely monitoring the first executive actions from President Trump’s administration, particularly around trade and economic stimulus. For the Pound, upcoming domestic data releases and continued labor market trends will play a key role in shaping its performance.
Traders should brace for heightened volatility in both GBP and USD pairs as these developments unfold. If you need assistance navigating the market or managing currency exposure, feel free to reach out for tailored insights and strategies.
GBP/EUR 1.1820 GBP/USD 1.2230 GBP/AED 4.4945
GBP/AUD 1.9652 GBP/CHF 1.1138 GBP/CAD 1.7655
GBP/NZD 2.1740 EUR/USD 1.0335 GBP/ZAR 22.8448