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Wage figures to make May rate hike a certainty?

business-articlesWage figures to make May rate hike a certainty?
  • GBP likely to be buoyed by UK wage growth figures
  • Eurozone’s economic sentiment to worsen?
  • NZD may fall following diary auction
Pound poised to surge as wage growth picks up

The pound looks set to soar this morning as the UK publishes its latest labour report.

Today’s data is expected to see the unemployment rate hold at a 42-year low of 4.3% in February, with an extra 33,000 people forecast to join the workforce.

While the employment data will likely be welcomed by GBP investors it is the accompanying wage growth figures that will likely be the main driver for gains in the Pound today.

Analysts predict that today’s data will show wage growth (including bonuses) ticked up from 2.8% to 3% in February, striking its highest levels since 2015.

Most importantly this will mean wage growth outpaced inflation in February, something which will further the case for the Bank of England (BoE) to consider raising interest rates next month.

Growing pessimism to drag on EUR?

The euro may find itself on the back foot today, following the release of the Eurozone’s latest economic sentiment survey.

The sentiment index is expected to have tumbled even lower this month as economists become increasingly pessimistic in their economic outlook for the Eurozone.

Analysts suggest that this will likely be driven by growing concerns over US trade policy and its impact on the Eurozone as well as recent data which indicates that the bloc expanded at a more modest pace in the first quarter.

A separate survey for Germany is even expected to show that sentiment for Europe’s largest economy fell into negative territory this month, further denting the appeal of the euro.

Potential drop in dairy prices likely to weaken NZD

The New Zealand dollar may also stumble during today’s trading session, depending on the outcome of the latest Global Dairy Auction.

Prices have fallen at the last four consecutive auctions and observers are forecasting that this downtrend may continue today, likely dragging on the NZD exchange rate.

As dairy products account for over 20% of New Zealand’s exports, its price can have a noticeable impact on New Zealand’s economic performance.

Upcoming Data

Tuesday, 17 April, 2018
09:30                     GBP Wage Growth
10:00                     EUR Economic Sentiment Index
15:00                     NZD Global Dairy Auction
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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