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Sterling received a welcome boost yesterday with some better than expected job figures helping the Pound recover the losses it saw during Tuesday’s trading day.
At 9:30am yesterday the UK released its Average Earning, Claimant Count and Unemployment rate all showing an improvement on the anticipated figures. The Unemployment rate actually dropped to its lowest figure since 1975 to 4.5% and the claimant count dropping to 6.0k. This helped the Pound move steadily higher throughout the day against the majority of its counterparts breaking back through €1.13 and $1.29 against the Euro and USD respectively. The movement was a positive one for anyone looking to purchase the single currency. Buying €300,000 between the high and low of the day’s session would have saved you £3400.
GBP/EUR 1-week graph
However, with the impact of the high inflation rate factored in to wage growth it has actually fallen by 0.5% on a weekly basis compared to the same period last year. With this in mind the likely hood of a UK interest rate hike in August has fallen to the wayside. Many analysts are now expecting the next rate rise later this year or possibly early 2018.
“The continued weakness of wage growth provides some ammunition to the more dovish members of the MPC that now is not the time to raise interest rates,” said Paul Hollingsworth, UK economist at Capital Economics. “Given the emphasis that some members of the Monetary Policy Committee, including Governor Carney, have put on wanting to see a clear “firming” in wage growth before they join others in voting to hike interest rates, we still think it is more likely than not that the MPC will hold off for a while longer, rather than raise interest rates imminently.”
Get in touch
If you have an upcoming currency requirement and are concerned at how the recent volatility as affected the cost of your purchase get in touch with a broker at the Foremost Currency Group and they will gladly explain what it is they can do for you. We will run through the various contracts that we have to offer and put a plan together to help make the most out of what could be the most important purchase of your life.
It is a quiet day in terms of eco-stats for the UK and Eurozone with no high impact data releases. It will be a busier afternoon with the US publishing their PPI and Unemployment claims, these will be closely watched by investors as the US could be looking at raising their base interest rate again in the future.
T: 01442 892067