Average earnings in for the UK saw a growth of acceleration for the first time in more than a year reaching 5.2%. In the last month average earnings came in at 4.9%, now boosting confidence not only for a wage acceleration but also dampens markets speculation ahead of Thursdays interest rate decision from Bank of England. In the last week we have seen percentages for a potential rate cut increase for Bank of England. This slow down GBP recent momentum against other currency pairs. The release this morning of stronger earnings in the UK have seen GBP/EUR gained 0.3% since the opening of Tuesday’s session, with percentages falling on a rate cut this Thursday. Main sectors behind the lift for average earnings is construction, finance business sectors who saw the largest pay rises.
This afternoon the US release their retail sales for December. Since August there has been a slowdown for US retail sales – today’s forecast is that we will see an improvement to increase to 0.5%, compared to its previous month of 0.4%. Retail sales is vital when it comes to the US job market – seeing a better performing retail sector tends to boost job opportunities. The Federal Reserve’s main area they’re watching now ahead of their interest rate decisions is jobs. If retail sales would improve this afternoon, it’s likely that the job market will follow suit, and this could be of importance ahead of Federal Reserve’s meeting tomorrow. As it stands the Federal Reserve will lower their borrowing cost by 25 basis points in December. It’s in the forward guidance afterwards – if mentions of a more hawkish outlook on holding rates for longer between rate cuts from the Federal Reserve we could see additional USD strength against its currency peers.
GBP/EUR 1.2092 GBP/USD 1.2686 GBP/AED 4.6626
GBP/AUD 2.0002 GBP/CHF 1.1379 GBP/CAD 1.8117
GBP/NZD 2.2033 EUR/USD 1.0480 GBP/ZAR 22.9386