The Pound has begun Tuesday trading higher against the US Dollar (GBP/USD), Euro (GBP/EUR), and Indian Rupee (GBP/INR) after UK labour market data.
Update: Pound Exchange Rate Climbs as UK Wage Growth Jumps
The Pound climbed against other currency majors when data showed UK wages had jumped to 3.1% in the three months through August on the year, a nine-year high. Basic wage growth showed an acceleration to its highest level since the depths of the Global Financial Crisis in 2009, despite forecasts to remain the same as the previous reading. British unemployment levels also remained at a 43-year low. The news comes as a welcome distraction to the ongoing Brexit situation, and has seen Sterling surge against a basket of other currencies.
Global Reach Chief Economist, Eimear Daly, said:
‘The move higher in GBP may be short-lived. Sterling valuation is much more determined by Brexit developments than UK fundamentals these days. We expect this to continue until a final Withdrawal Agreement is reached and passed in Parliament. We await further Brexit headlines from a UK Cabinet meeting today.’
As Tuesday afternoon continued, Sterling carried on making gains against the US Dollar and Euro. GBP/USD climbed by around 0.60%, hitting highs of 1.3235, while GBP/EUR traded as high as 1.1424.
Sterling Awaits Labour Market Data
One of the main questions in the market today is whether the UK unemployment rate will remain at a 43-year low. With Brexit tensions raging as the official exit day approaches, amid a backdrop of a global trade war, investors will be interested to see how resilient the UK really is. It’s expected the Unemployment Rate figure will remain at 4.0% in the three months through August on the year.
Another very important question today will be whether wage growth is outpacing inflation, or lagging behind. Last month, the basic pay ecostat surged to 2.9% on the year, the quickest page in over three years. Total wage growth was a little lower, at 2.6%. The three months through August are expected to have the same reading, while inflation data due out on Thursday is thought to fall from 2.7% to 2.6% in September.
Brexit Key Influencer for Pound (GBP) Exchange Rate
It could be, that labour data proves a small distraction away from the ongoing Brexit chaos and uncertainty, where Theresa May attempts to get approval for her deal that has no real answer to the Irish border issue.
Industry expert Jasper Lawler commented:
‘Brexit developments are expected to remain the key driver of the Pound; however, for a few fleeting minutes traders will turn their attention to UK jobs data… It will take a significant beat to the upside to inject some optimism into the Pound. On the other hand, any weakness in the figures could drag on the Pound given the downside risks of Brexit already making the pound sensitive.’
The Pound to Indian Rupee (GBP/INR) exchange rate is trending in the interbank region of 97.0550. The Pound to US Dollar (GBP/USD) exchange rate is trading at highs of 1.3235. The Pound to Euro (GBP/EUR) exchange rate is trading at 1.1424.