Sterling remains broadly weaker against its major currency parings in early trading. The pound showed little reaction to data released this morning, showing that UK unemployment fell below its pre-pandemic rate in the three months to January. The figures released by the Office of National Statistics (ONS) showed the jobless rate dropped more than expected to 3.9% in the last quarter of 2021, its lowest since January 2020. However, the figures were offset by more signs of a squeeze on living standards. Data released at the same time showed that wages fell in real terms at the sharpest rate for more than seven years. Although, average earnings climbed 3.8% in the last quarter, the increases are not keeping up with inflation, now at a 30-year high and expected to rise further in the spring as the Ukraine conflict adds pressure to energy bills and global commodity prices.


The euro has benefited from a fall in commodity prices, especially oil which fell below $100 first time the first time this month. With the eurozone being a major importer of Russian oil and gas, the single currency’s movement’s currently have a correlation with energy prices. Spanish central chief Pablo Hernandez this morning joined fellow recent policymakers by warning that the Russian-Ukraine conflict will have adverse consequences on economic activity and increase inflationary pressures. European Central Bank President Christine Lagarde is due to speak later this afternoon and the ZEW economic sentiment survey, which measures the degree of optimism investors and economists have in the eurozone economy, is released this morning.


The dollar index, which measures the greenback against six of its major peers was down 0.25% in early trading, mainly due to losses against the euro which was up 0.35% against the dollar. Although the dollar traded weaker across the board, it showed no signs of losing demand against the yen and hit a fresh 5-year high. The Federal Reserve Bank will today start its meeting which concludes tomorrow evening where they are expected to raise interest rates by 25 basis points.

Economic Calendar

10.00 EUR ZEW Economic sentiment survey
13.30 USD US Producer Price Index
15.15 EUR ECB’s Lagarde speech