On Tuesday, data revealed that while the UK unemployment rate fell back to 3.8 per cent, the lowest level since 1975, the number of people in work slumped by around 58,000. This was the largest drop in employment in four years. Wage growth also disappointed, with average weekly earnings by 3.6 per cent rather than the 3.8% expected. The Office for National Statistics (ONS) stated: “The employment rate is higher than a year ago, though broadly unchanged in recent months. Vacancies have seen their biggest annual fall since late 2009, but remain high by historical standards.”
However, the pound held firm despite the disappointing labour data as investors remained focused on political developments ahead of December’s election.
Monday saw Brexit Party Leader Nigel Farage announce his party would not contest Conservative seats but would instead focus on challenging anti-Brexit politicians, and Sterling spiked in response.
Following yesterday’s reports, there was a more cautious note to trading today, with some commentators suggesting that the development may not have a substantial impact on the election result.
Meanwhile, November’s ZEW economic sentiment survey revealed that the mood among German investors improved more than expected.
Sentiment in the bloc’s largest economy jumped from -22.8 to -2.1 in November, smashing forecasts for a reading of -13.0.
Commenting on this morning’s data, ZEW President, Achim Wambach stated:
“There is growing hope that the international economic policy environment will improve in the near future, which explains the sharp rise in the ZEW Indicator of Economic Sentiment in November.
“In the meantime, the chances for an agreement between Great Britain and the EU and thus for a regulated withdrawal of Great Britain have noticeably increased.”
The euro’s gains were limited, but the currency could climb following a speech by US President Trump, in which he is expected to announce a delay in tariffs on European Union autos.