Wage growth boosts pound, higher rates coming
Published on 21.03.2018 16:56

The British pound received another boost today against its US counterpart after a round of solid local data which follow’s on from news earlier in the week on the agreement of a transition deal between the UK and the EU.

Job figures released earlier today showed the unemployment rate falling to 4.3 percent from a previous figure of 4.4 percent which marks the lowest level since 1975.

The most important figure for the market was the wage growth figures which hit the market at 2.8 percent which was up from 2.5 percent from the previous period.

The number also beat analysts’ expectations who were expecting a figure of 2.6 percent.

The pound pushed significantly higher on the news as many now predict it has paved the way for the bank of England to lift interest rates over the coming months without having to worry about overall wage growth which seems to have kept them from raising rates earlier.

"January’s labour market figures provided clearer signs of a revival in earnings growth, suggesting that it won’t be long before we start to see sustained rises in real pay," says Ruth Gregory, a UK economist at Capital Economics.

"Overall, today’s figures add further weight to our view that the next interest rate hike will occur in May." He added.

Yesterday’s CPI figures which came in below expectations will also relieve some pressure on the BOE if they lift interest rates as the fear of pushing inflation higher subsides

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Andrew Masters

Analyst

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