Markets were driven by broad USD weakness after mixed US jobs data showed the unemployment rate rising to 5.1% – its highest since early 2021 – prompting fresh repositioning against the greenback. October's payrolls showed 105,000 job losses but November's numbers came in higher at 64,000. However, USD recovered by the end of US Trading hours.
GBP benefited from a stronger than expected set of PMI numbers in November, helped by an accelerating services sector and the strongest increase in factory output in 15 months. Earlier in the morning data pointed to a cooling UK job market cementing expectations for a BoE cut later this week.
The EUR in contrast weakened vs GBP after both services and manufacturing data came in below forecasts. The accompanying report noted that economic growth slowed at the end of the year due to a slight contraction in the manufacturing sector and weaker momentum in services.
*Daily move - against G10 rates as of 06:00 GMT, 17.12.25
** Indicative rates - interbank rates as of 06:00 GMT, 17.12.25
After all components came in under expectations, UK CPIs should satisfy the BoE doves ahead of the central bank meeting on Thursday. CPI YoY came in at 3.2% vs 3.5% expected; core at 3.2% vs 3.4% expected, and services at 4.4% vs 4.5% expected. GBP, to no surprise, is thus trading lower this morning with markets now pricing in 67bps worth of rate cuts by end of 2026 from 58bps expected yesterday morning.
EU CPI numbers are the final ones for November, so unless there is any big deviation or anything to support recent ECB hawkish comments, then these numbers shouldn’t add too much volatility.
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