A bit of a cheerier Tuesday for the pound was followed by a dismal Wednesday as GBP exchange rates racked up losses across the board thanks to concerning UK wage data.
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Daily Market Analysis June 15th 2017 |
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Falling wage growth leaves pound struggling, BoE decision ahead A bit of a cheerier Tuesday for the pound was followed by a dismal Wednesday as GBP exchange rates racked up losses across the board thanks to concerning UK wage data. GBP/EUR dropped from €1.1404 to €1.1319, GBP/USD flopped from $1.2811 to $1.2723, GBP/AUD edged from AU$1.6914 to AU$1.6722 and GBP/NZD hit a low of NZ$1.7446. The pound did show resilience against the Canadian dollar however, with GBP/CAD recovering from C$1.6787 to C$1.6921. What next for the major currencies? Keep scrolling to find out… |
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Today's Rate The rates above are using the British pound (GBP) as the base rate. All rates are for indication purposes only. Prices can vary dramatically based on amount and delivery date. |
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| "If the odds of the BoE increasing interest rates were low before the general election, they’re now bordering on non-existent in light of the uncertain political situation." Transfer 24/7 with our currencies direct app |
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What’s been happening? Although the UK’s latest batch of labour market data showed that the unemployment rate held at a multi-decade low of 4.6%, the pound was left floundering as a result of the wage aspect of the report. Growth in average earnings (excluding bonuses) came in at 1.7% - below the forecast figure and considerably below May’s 2.9% rate of inflation. According to PwC economist John Hawksworth; ‘With inflation likely to be heading above 3% later this year, the squeeze on real pay growth is now getting serious and is likely to dampen real consumer spending growth for some time to come.’ News that the Conservative’s talks with the Democratic Unionist Party (DUP) are ongoing also left the pound unappealing as the UK remains without a working government one week after the public took to the polls. GBP/USD consolidated losses after the Federal Reserve increased interest rates. Although the move was widely expected, the central bank also outlined plans to wind back quantitative easing and raised growth forecasts, which was enough to give the US dollar a boost. |
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What's coming up? All eyes will be on the Bank of England (BoE) today as the institution gathers to deliver its latest interest rate decision. If the odds of the central bank increasing interest rates were low before the general election, they’re now bordering on non-existent in light of the uncertain political situation. The best the pound can really hope for is the BoE adopting a relatively neutral stance. If it hints that easing measures could be increased to support the UK economy as Brexit negotiations get underway the pound may well fall back to its post-election lows. Today we also have Canadian housing/manufacturing shipment reports on the agenda. Upbeat figures could help CAD bounce back after being battered by falling oil prices yesterday. US manufacturing and industrial production figures will follow, with increased output having the potential to give the US dollar another lift. We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers. |
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| Phil McHugh,
Trading Floor Manager Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure. |
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