Pound recovers after decent job figures raise some doubt on BoE cut
The Pound has made back some ground this morning after the release of the latest UK job/wages figures.
The data showed that job growth was the strongest in nearly a year with employment rising by 208K versus forecasts of around 110K. Furthermore, wage numbers beat expectations at 3.2% annually and the unemployment rate remained at 3.8% in November.
Signs of weakness in the job market led to a couple of BoE policymakers voting for a rate cut last year and other policymakers have recently indicated that further stimulus might be needed. Last week’s inflation figures disappointed and this pushed the odds of a 30th January rate cut (0.25%) to around 70% .
Today’s data, however, has helped weaken the case for a BoE interest rate cut which has led to increased demand for Sterling this morning. This data set was taken before Boris’s emphatic election victory on December 12th, which some feel has improved consumer and business confidence, so it will be interesting to see how future data comes in. Traders (and the BoE) will be eyeing up this Friday’s PMI figures (9.30am) for the first post-election key data releases. A strong showing here would really make them question whether a January rate cut is the right move. Watch this space.
As a result, the Pound has clawed back around a cent against the USD and 0.75-cent against the Euro.