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Pound to relinquish gains as UK wage growth plunges

currency-newsPound to relinquish gains as UK wage growth plunges
The pound ticked higher yesterday, rallying in choppy trade which saw its main peers come under some selling pressure.

Sterling is struggling to extend these gains this morning, however, with GBP/EUR muted at €1.1135 and GBP/USD subdued at $1.3062. GBP/CAD is flat at C$1.7439, while GBP/AUD and GBP/NZD hold steady at AU$1.8250 and NZ$1.9778, respectively.

The UK’s latest employment report published this morning is in the spotlight today. Will a sharp drop in wage growth dampen the appeal of the pound today?

What’s been happening?

The pound enjoyed some tentative gains on Monday, with the currency benefitting from a more upbeat market mood and broad weakness of some of its peers.

This offset some concerns over impending job losses in the UK after a survey suggested that up to a third of businesses are thinking about laying off workers.

The euro was on the defensive yesterday as rising coronavirus infections throughout Europe began to increasingly unnerve EUR investors.

The US dollar, meanwhile, initially opened the session on strong footing as US-China tensions buoyed demand for the safe-haven currency.

However, as the market mood improved these gains quickly faded, causing the ‘Greenback’ to relinquish these gains by the end of the European session.

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest jobs report.

While the unemployment rate held steady in June thanks to the government’s furlough scheme, this morning’s figures highlighted a worrying plunge in domestic wage growth, causing concerns that could leave the pound on the defensive through today’s session.

For EUR investors the focus this morning will be on the publication of ZEW’s economic surveys, with the euro potentially rising if August’s release highlights another improvement in Eurozone economic sentiment.

Meanwhile, in the US talks between the Republicans and Democrats regarding the next round of US stimulus are set to continue today.

Will the two sides be able to break the impasse and unlock some much-needed funds for states and families, or will a lack of compromise threaten the US recovery?
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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