Talking Points
- The latest UK labor-market report came in stronger than expected, lifting the British Pound.
- However, the downward pressure on the currency is likely to persist longer-term.
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Average weekly earnings in the UK climbed by 2.1% on a three-months year/year basis in June, above both the previous 1.9% and the 1.8% predicted by economists. While that is still below the 2.6% headline inflation rate, it does suggest slightly less of a squeeze on real incomes than forecast.
Moreover, the unemployment rate unexpectedly fell to 4.4% from 4.5% while the claimant-count measure of unemployment fell by 4,200 rather than increasing by 3,700 as economists had forecast.
Taken together, the data make it marginally more likely that the Bank of England will decide to tighten monetary policy this year and therefore lifted the British Pound. However, the longer-term outlook for the currency remains bleak against both the US Dollar and the Euro.
You can read more about the data here.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
Follow Martin on Twitter @MartinSEssex
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