Unemployment rate rises to highest level since the pandemic as jobs market cools
Daily Currency Update
The UK Office for National Statistics reported that unemployment rose to 4.7% in the three months to May—the highest since June 2021—amid economic uncertainty, global pressures, and high interest rates. The UK economy contracted in April and May, worsening labour market conditions, with payroll numbers falling by 41,000 in June, job vacancies dropping by 56,000 to 727,000, and wage growth easing to 5%. Liz McKeown of the ONS noted continued labour market softening, though revised tax data suggests the decline may be less severe than first reported. The Bank of England may consider larger interest rate cuts if employment conditions keep deteriorating.Key Movers
President Trump discussed the idea of firing Federal Reserve Chair Jerome Powell during a recent Oval Office meeting with House Republicans. Although he ultimately said it's "highly unlikely" he will do so, Trump confirmed raising the issue and noted most lawmakers supported the idea. His criticism of Powell stems from the Fed's decision to keep interest rates high to combat inflation and Powell’s management of a Fed office renovation. Trump has publicly insulted Powell in the past, despite appointing him to the role.The Federal Reserve, the U.S. central bank, consists of 12 regional banks and a Board of Governors. It regulates banks, acts as a lender of last resort, and manages payments. Its key role is setting monetary policy through the Federal Open Market Committee, including Chair Powell, independently of politicians. The Fed’s “dual mandate” aims to maximise employment and keep inflation low, but these goals often conflict: lowering interest rates can boost growth but increase inflation, while raising rates can reduce inflation but slow the economy.
Expected Ranges
- GBP/USD: 1.3379 - 1.3464 ▲
- GBP/EUR: 1.1503 - 1.1545 ▲
- GBP/AUD: 2.0533 - 2.0618 ▲
- EUR/USD: 1.1654 - 1.1698 ▲