UK employment change over three months rose to 148K in March. The previous figure was 25K.<\/p>\n
The update refers to changes in employment over a three-month period. It was reported for March in the United Kingdom.<\/p>\n
The strong UK employment figures from March, showing a jump to 148K, confirm a trend of a tightening labour market that we’ve been watching. While this data is now two months old, it adds weight to the view that the British economy has solid momentum. This underlying strength is a key factor for the Bank of England’s upcoming decisions.<\/p>\n
This jobs data makes recent inflation numbers even more important for our strategy. The latest Office for National Statistics release showed April’s CPI held firm at 2.4%, still stubbornly above the Bank’s 2% target. This combination of a hot labour market and persistent inflation has significantly reduced the chances of an early summer interest rate cut.<\/p>\n
For those trading interest rate derivatives, this means re-evaluating SONIA futures contracts for the third and fourth quarters. We should anticipate that the market will continue to price out rate cuts that seemed likely just a few months ago. The Bank of England’s hawkish tone at their May 9th meeting, where they held rates at 5.25%, supports this cautious stance.<\/p>\n
In the currency markets, this economic picture continues to favour a stronger pound. Implied volatility in GBP\/USD options has been rising as traders weigh the divergent paths of the BoE and a potentially more dovish US Federal Reserve. We see opportunities in strategies that benefit from sterling strength against currencies with weaker economic outlooks.<\/p>\n
This is a stark contrast to the sluggish growth and recession fears that dominated much of 2025. Back then, we were pricing in multiple rate cuts throughout 2026. The recent data, showing UK GDP grew by a healthy 0.5% in the first quarter of this year, has completely changed that narrative.<\/p>\n
Therefore, we should be positioned for continued strength in the UK economy, which may translate to higher volatility in the FTSE 100. While a strong economy is good for stocks, the threat of interest rates remaining higher for longer creates uncertainty. The key data to watch now will be the next employment report and the inflation figures for May, which will be critical for the Bank’s August decision.<\/p>\n
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