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UK Εmployment, Εarnings will Drive Sterling

H.S. Borji
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UK Εmployment, Εarnings will Drive Sterling

The Office for National Statistics will report on UK employment and earnings data Wednesday, giving investors a closer look at the pace of UK recovery. Last month the ONS said jobless claims declined 34,600 in February, while earnings accelerated 1.4 percent.

Tomorrow’s data could show UK jobless claims fell by 30,000 in March, while average earnings including bonus rose above the standard of living for the first time in nearly five years, according to a broad consensus of market analysts. Economists expect unemployment to have declined to 7.1 percent in the three months through February. Unemployment was unchanged at 7.2 percent between November and January.

The British pound should be highly active Wednesday, as official data are expected to show broad improvements in the labour market. According to forecasts, average earnings including bonuses rose 1.8 percent between December and February, while earnings excluding bonuses rose 1.7 percent over the same period.

A rapidly improving labour market has been at the centre of UK recovery. Steady job growth and declining unemployment forced the Bank of England to abandon its rate guidance earlier this year. The BOE, which made unemployment a lynchpin of monetary policy last summer, will keep interest rates at record lows after the 7 percent unemployment threshold has been reached.

In Tuesday’s morning session, the GBPUSD pair was trading at 1.6730, relatively unchanged from the previous close. The pair recovered from a session low of 1.6659. In addition to UK employment data, US housing and building permits data could also impact the GBPUSD pair Wednesday.

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