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GBP at the mercy of UK wage figures, USD may be weakened by PMI Data

business-articlesGBP at the mercy of UK wage figures, USD may be weakened by PMI Data
  • UK employment data may strengthen GBP
  • US economic activity forecast to slide in January
  • Possible slide in inflation may pressure NZD
GBP poised to rise if wage growth ticks higher

The UK will publish its latest employment statistics later this morning, with economists forecasting that jobless rate will have held at 4.3% again in November.

This will see the unemployment rate remain at a 42-year low and well below the long-term average of 7%.
However, it’s the accompanying earnings figures that may prove to have the biggest impact on the Pound.

While wage growth is also expected to remain steady in November, a surprise uptick could prompt a notable jump in Sterling as it would help relieve some of the pressure on UK consumers.

Conversely, an unexpected dip in wages could prove disastrous for the Pound as it widens the gap with inflation and dents the chances of the Bank of England (BoE) hiking rates this year.

Slide in PMI figures may damage USD

The US dollar may find itself on the back foot again today as IHS Markit releases its latest PMI flash.
While this is not the more widely recognized ISM reading, it should still give some indication of how the US economy fared at the start of 2018.

The preliminary reading is expected to show that, despite an uptick in activity in the services sector this month, economic activity in the US slid in January, with the composite PMI predicted to slip from 54.1 to 53.5.

Such a slide would leave the index at its lowest levels since June and would be a major contrast from the same point last year when the index struck a two-year high as it neared 56.

New Zealand inflation expected to have slipped in Q4

New Zealand will publish its latest CPI figures later this evening, with an expected drop in inflation likely to weaken the New Zealand Dollar.

Analysts currently predict that New Zealand’s inflation rate will have dipped from 0.5% to 0.4% in the fourth quarter.

Given the volatility that has been seen in New Zealand’s inflation figures this year, however, some investors are bracing for a more dramatic movement. 

Upcoming Data

Wednesday, 24 January, 2018
09:30               GBP Unemployment Rate
09:30               GBP Wage Growth
14:45               USD Composite PMI
21:45               NZD Inflation Rate
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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