Market Spotlight: Pressure On BOE As UK Wages Rise Again & Unemployment Falls
UK Wages Rise As Unemployment Falls
The latest UK labour market data released today has further increased expectations of aggressive tightening action from the BOE. The unemployment rate was seen falling back to 3.6% in the three months to July, marking the lowest level of unemployment in the UK in almost 50 years. Additionally, wages growth was seen rising to 5.5% over the same period marking an increase from the prior 5.1% reading. With labour market tightness increasing and wages rising, inflationary pressures look deeply entrenched, increasing the need for the BOE to take further action.
GBP is rallying on the back of the data as traders position ahead of the BOE. Before the rate decision on Thursday, however, we have UK CPI due tomorrow. Market forecasts are for an unchanged reading of 10.1%. However, given the labour market data we’ve seen, upside risks are clearly there and if we see a further CPI upside surprise tomorrow, GBP is likely to trade higher still.
Technical Views
GBPUSD
GBPUSD is now testing above the bear channel top once again and is also challenging the 1.1764 level. With both MACD and RSI bullish here, if bulls can break back above this level, there is room for a fuller recovery towards the 1.2195 level. This is especially true is today’s US CPI release undershoots forecasts, weighing on USD near-term.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.