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Pound jumps as BoE rate speculation eases on robust UK wage growth

currency-newsPound jumps as BoE rate speculation eases on robust UK wage growth
The pound ticked higher against its rivals yesterday thanks to an impressive UK employment report.

Sterling is holding steady this morning, with GBP/EUR trading at €1.1774, GBP/USD achieving $1.3046, and GBP/CAD fluctuating around C$1.7061. GBP/AUD and GBP/NZD are trending in the region of AU$1.9081 and NZ$1.9807 respectively.

What’s been happening?

The pound rallied on Tuesday as the market odds for a rate cut from the Bank of England (BoE) this month fell in the wake of the UK’s latest employment report.

The Office for National Statistics (ONS) reported the unemployment rate remained at a near 45-year low of 3.8% in November, while wage growth held at 3.2% over the same period.

The robust wage growth figures appeared to be the main focus for GBP investors, many of whom had expected it to slow to 3.1%.

In response the odds of a January rate cut from the BoE fell from 72% back to 60%.

The euro also found support through yesterday’s session with the publication of the latest ZEW economic surveys.

EUR exchange rates were buoyed after the surveys saw economic sentiment in the Eurozone jump to its best levels since February 2018 on the back of easing global trade tensions.

What’s coming up?

Looking ahead, the pound may struggle to extend its gains today, with a renewed focus on Brexit potentially limiting any further upside in the currency.

Also influencing GBP exchange rates will be the Confederation of British Industry’s (CBI) industrial figures, with Sterling likely being pressured as economists forecast orders contracted in January.

For USD investors the focus will be on US existing home sales, with a rebound in sales growth last month potentially buoying the US dollar.

Finally, with the European Central Bank’s (ECB) latest policy decision due on Thursday, we expect the euro to remain in a holding position through today’s session.
 
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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