Pound continues good run as job/wage figures surprise on upside

The Pound has just moved higher following some stronger UK wage and job figures.

The data showed that workers pay rose at the fastest pace in nearly 2.5-years. The average earnings in the 3-months up to end of January rose 2.8% versus an expected 2.6%. Furthermore, the data showed unemployment levels dropping even further to 4.3% (vs. 4.7% a year ago) which is the joint lowest since 1975.

Although yesterday’s inflation data missed forecasts, today’s figures have boosted the odds that the Bank of England will hike interest rates again in May. This comes on top on Monday’s news that a transition deal had been agreed with the EU. The market now feel the BoE can spread their wings a bit, as they’ll feel there’s less risk in them putting rates up now. Their current interest rate meeting concludes tomorrow and we will see their decision, voting pattern and meeting minutes tomorrow at midday. The market will closely assess the tone and voting pattern for further clues on whether a hike is even more likely in May.

As a result, we are close to a 2-mth high against the Euro and the USD is close to a fresh 1-mth high.

Pound surges as EU and UK agree transition period

The Pound has surged higher this morning as the EU and UK have agreed a post-Brexit transition deal.

Essentially, the status-quo on trade between the UK and EU will remain in place until the end of 2020 (21 months).  This should ensure a more orderly exit for the UK and it will be warmly received by businesses from both sides of the channel, who have been calling out for more time and certainty over this.

They’ve agreed on most parts of this transition period, including citizens rights, although solutions over the Irish border issue have been pushed back and there’s hope that once they move onto future trade talks then they might be able to find some new answers. The final decision on the transition deal will be made at this week’s EU summit, but it’s expected to be voted through by all members.

As a result, the GBP/USD has moved up around 1.5-cents this morning and now trades at a 1-mth high. The Euro has also gained on the back of the positive news, but not as much as Sterling, so the GBP/EUR rate has pushed up around 1-cent, now trading at a 6-week high.

This week is a fairly pivotal one for the Pound, with lots of data (inflation tomorrow, wage data Weds, retail sales Thurs) and the BoE interest rate meeting on Thursday.