The Pound (GBP) tumbled against the majority of its peers on Wednesday as markets were less than impressed by the UK’s latest employment data.
While data published by the ONS revealed that unemployment fell to a new 42-year low of 4.3% in July, investors were dismayed to learn that wage growth remained flat over the same period, holding at 2.1% against expectations it would rise to 2.3%.
Meanwhile with the Bank of England (BoE) is set to release its latest monetary policy statement later this afternoon, with Sterling likely to stumble yet again if the bank strikes a dovish tone as predicted.
While the Pound Euro (GBP EUR) exchange rate stumbled on the back of the UK’s wage data yesterday, the pairing quickly recovered by the afternoon following comments from a member of the European Central Bank (ECB).
ECB chief economist Peter Praet struck a cautious tone yesterday as he again called for a ‘steady hand’ in regards to the tightening of the bank’s ultra-loose monetary policy.
The single currency may come under further pressure later today as investors predict that ECB policy maker, Yves Mersch is likely to strike an equally dovish tone in a speech this afternoon.
Sterling nosedived by around a cent against the US Dollar (USD) on Wednesday as markets feared that another month of anaemic wage growth will place further strain on household finances in the UK.
The ‘Greenback’ was also bolstered yesterday as the US release of August’s PPI figures showed that producer prices rebounded last month after a slight decline in July.
Meanwhile USD investors will be focused on the latest US inflation figures this afternoon as muted inflationary pressures remain a major barrier for the Federal Reserve in raising rates a third time this year.
The Pound Canadian Dollar (GBP CAD) exchange rate also tumbled by around a cent yesterday as a report from the International Energy Agency (IEA) suggested that global crude stocks were beginning to fall, bolstering oil prices and consequently the ‘Loonie’.
Sterling extended its losses against the Australian Dollar (AUD) overnight on Wednesday as the ‘Aussie’ was strengthened by better than expected domestic employment data, with the Australian economy adding 54,200 jobs in August – well above the 15,000 that had been forecast.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate continued to fluctuate on Wednesday as a tightly run election race in New Zealand causes the ‘Kiwi’ to be marred by political uncertainty.