GBP/USD Rises Higher on Strong Wage Data
UK monetary data released today specified a much stronger UK labor market improvement, and optimistic attitude for Sterling bulls soared in response. UK Jobless Claims Change (JAN) was at -38.6K, finer than the reviewed result of -25.0K as not as much of people claimed unemployment benefits.
Employment change (3M/3M)(DEC) was higher more than double the 50K estimated, to be 103K out of unemployment, and ILO Unemployment Rate (3M)(DEC) hit outlooks at 5.7% compared to the prediction of 5.8%. Signifying a further growth of the labor market, Average Weekly Earnings (3M/YoY)(DEC) increased by 2.1%, much better than economist outlooks of 1.7%, indicating that predictions of a near term rate hike may be reverse on the table for the Bank of England.
The faster growth in employment and wages driven the market to send the GBP/USD higher by more than 60 pips, breaking for Monday’s high of 1.5439. This appears also in reply to Band of England’s outlook that CPI will be rising “quite sharply” after oil effect fades.
The BOE minutes release today disclosed members voted 9-0 to sustain interest rate unchanged at 0.5%, also 9-0 to keep the BOE’s Asset Purchase Facility unchanged. The great positivity on the UK labor market and the BOE’s confidence in a quick rebound on inflation levels lose fears of prolonged stagnation in asset price growth, and ignites the hope that the UK may raise benchmark interest rates sooner rather than later.
The market will be looking forward for the US Federal Reserve’s January FOMC meeting minutes at 19:00 GMT. The data should give a further boost to market confidence to take on more risk, if the Fed’s tone is in line with consensual probability of strong US economic expansion that can rationalize normalization in economic policy. However the market has so far to see just how much the Fed is factoring in the rising uncertainty for Greece, the effect of the ever spiraling US Dollar, and the prospect of a premature rate trek that might shut down the US’s miracle recovery in its tracks.