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Pound buoyed by UK employment report

currency-newsPound buoyed by UK employment report
The pound ticked higher on Tuesday, in response to the UK’s latest employment figures.

Meanwhile, Sterling is struggling to attract support this morning, with GBP/EUR muted at €1.1988 and GBP/USD subdued at $1.2993. GBP/CAD and GBP/AUD are holding steady at C$1.6424 and AU$1.7467, respectively, while GBP/NZD climbs to NZ$1.9114.

Looking ahead, will another rise in UK inflation weigh on the pound during today’s session.

What’s been happening?

The pound traded with modest gains yesterday, following the publication of the UK’s latest jobs report.

Sterling firmed as February’s figures reported UK unemployment fell to 3.8%, its lowest levels since late 2019, while average earnings climbed by 5.4%.

However, the upside in the pound was capped as the bump in wage growth was not enough to prevent another fall in real pay as wages continued to lag behind inflation.

At the same time, the euro was undermined by Germany's latest ZEW economic sentiment index, as it fell to its lowest levels since the start of the Covid pandemic.

This downside in the single currency was reinforced by comments from Russian President Vladimir Putin in which he claimed peace talks with Ukraine were a ‘dead end’.

Meanwhile, the US dollar ran afoul of some profit taking during yesterday's European trading session, in spite of another hotter-than-expected inflation reading bolstering expectations for a half-percentage interest rate hike from the Federal Reserve next month.

What’s coming up?

Kicking off today’s session was the publication of the UK’s consumer price index.

March’s index reported another acceleration of domestic inflation, rising from 6.2% to a new 30-year high of 7%.

With another rate hike from the Bank of England (BoE) next month largely priced in, any upside in the pound could prove limited today as another sharp rise in inflation will no doubt raise fresh concerns over the UK’s cost-of-living crisis.

Meanwhile the release of the latest US PPI figures could buoy the US dollar later this afternoon, as March’s release is expected to report an uptick in producer prices.

Finally, movement in the euro may be limited today, with EUR investors likely to be reluctant to make any aggressive bets ahead of the conclusion of the European Central Bank’s (ECB) latest policy meeting on Thursday.
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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