GBP Analysis and Talking Points
- Wage Growth Boosts GBP
- Employment Report Mixed Overall
See our Q4 GBP forecast to learn what will drive the currency through the quarter.
Wage Growth Boosts GBP
GBPUSD rose to session highs after the latest employment report with UK wages beginning to show some signs of life. The BoE focussed wage components rose above analyst estimates with the ex-bonus figure rising to the highest level since January 2009 at 3.1%. This also backs up recent commentary from BoE Chief Economist Haldane, who stated that wages are a growing source of inflationary pressures and as such will monitor closely. Consequently, this may see BoE hawks increase their calls for a rate rise sooner than what the market expects. BoE rate hike probability implies that a full 25bps hike is priced in by August 2019.
Employment Report Mixed Overall
Overall, the employment report had been somewhat mixed, which in turn had seen GBP retrace its initial spike higher. Employment change saw a surprise drop of 5k, while the claimant count rose above expectations. However, the unemployment rate continued to hover around a 40yr low, suggesting that the labour market remains tight.
Bank of England Rate Hike Probability
GBPUSD CHART: 1-Minute Time-Frame (Intra-day)
--- Written by Justin McQueen, Market Analyst
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