Sterling falls as UK unemployment hits highest rate in five years

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• BHP-AU

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LONDON — Sterling dipped and British government bond yields fell on Tuesday after data showed the UK’s unemployment rate rose to a five-year high while wage growth slowed.

The pan-European Stoxx 600 ended the session 0.5% higher, with major regional bourses and most sectors broadly higher.

London’s FTSE 100 finished dealmaking up 0.8%. Sterling fell against the dollar, and was last seen down 0.6% to settle at around $1.353, after the U.K.'s earnings and employment report showed the number of payrolled workers fell 0.4% on a yearly basis to 30.3 million in January 2026.

That’s 134,000 fewer employees since January 2025 and down 11,000 from the previous month. Meanwhile, the unemployment rate rose to 5.2% in December, up from 5.1% a month earlier. The pound was last down 0.2% against the Euro.

U.K. unemployment is now at its “highest level” since January 2021, hitting a five-year high, Samuel Fuller, director of Financial Markets Online, said.

British government bond yields, known as gilts, fell across the curve following the release of the jobs data. The 10-year Gilt was down nearly 3 basis points to 4.377%, while the 30-year gilt yield was 3 basis points lower at 5.181%.

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U.K. 10-year gilt

The UK has the highest long-term government borrowing costs of any G7 nation, with its 20- and 30-year gilt yields both trading well above the critical 5% threshold.

Bank of England futures are now fully pricing two cuts this year, with a 75% chance of a cut next month after the release of the unemployment figures.

“With Britain’s economy almost flatlining and the labour market weakening, falling inflation will be the final piece of the puzzle needed for the Bank’s ratesetting committee to pull the monetary stimulus lever,” Fuller added.

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Earnings remain in focus for investors. Miners Antofagasta and BHP Group released earnings on Tuesday, as well as InterContinental Hotels Group.

BHP shares closed 1.5% higher after it announced a record silver deal with Wheaton Precious Metals on Tuesday. The mining giant said the long-term silver streaming agreement would see BHP receive an upfront payment of $4.3 billion at completion.

BHP also posted stronger-than-expected earnings for its fiscal first half, driven by strong performance in its copper operations.

German inflation came in at 2.1% in January, up from 1.8% the previous month, the German Federal Statistical Office reported on Tuesday.  “The rise in overall consumer prices intensified at the start of the year,” Ruth Brand, president of the Federal Statistical Office, said in the release.

On Wall Street, the S&P 500 was near flat following two straight negative weeks for the benchmark, U.S markets were shut on Monday for Presidents’ Day.

Asian financial markets were treading carefully on Tuesday in holiday-thinned trading, with markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea closed on Tuesday for Lunar New Year.