GBP Bounces on Strong UK Jobs and Wages Data
- GBP/USD heads back towards 1.29000, breaking the recent downtrend.
- UK unemployment rate falls to 4.4%, the lowest level since 1975.
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UK unemployment fell to 4.4% from 4.5%, the lowest level since 1975, while the employment rate rose to a new record high of 75.1%, data released by the Office for National Statistics (ONS) showed today.
And in another piece of good news for Bank of England governor Mark Carney, UK average weekly earnings 3m y/y grew by 2.1% in June, up from 1.9% and beating expectations of 1.8% while weekly earnings ex-bonus nudged also rose to 2.1% from 2.0% prior and 2.0% expectations. While a positive note, real earnings – inflation minus wage growth - remain negative by 0.5%, leaving the UK consumer out of pocket.
Sterling picked on the positive set of readings as traders begin to price in the possibility of a rate hike this year, although this remains unlikely, especially with UK inflation nudging lower and back towards target. Slow UK growth will also hamper any chance of a 2017 hike although a strong set of UK Retail Sales numbers on Thursday may embolden the hawks.
Chart: GBPUSD 5 Minute Timeframe (August 16, 2017)
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--- Written by Nick Cawley, Analyst
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