By Simon Eastman
For sterling markets, we had the release of jobs data first thing yesterday, with a mixed bag of outcomes. Average earnings were expected to fall from last month, but we saw the figure stay the same at 6.6 percent. Good news but also a concern adding to inflationary pressures.
Unemployment, which showed a higher than forecast figure of 3.8 percent, up from last month and a claimant count figure which was also disappointing, added further pressure to the pound. The amount of people claiming job seekers was expected to fall by nearly 12,000 but actually grew by nearly 30,000, showing a sorry picture of the UK economy at present.
Given the mixed outcome and impact, the pound did rally slightly but with the euro performing well against the pound and the US dollar recently, it struggled and traded within a 30 pip range all day. Against the weaker greenback, the gain was better, up a cent nearly at the peak until some hawkish Fed comments reversed the rally, ending just over half a cent up by UK close.
For any Loonie buyers, we saw Canadian inflation figures released, all coming in above forecast, showing inflationary pressures still building. They had seen inflation coming down since raising rates a number of times in 2022, keeping them steady at 4.5 percent since January this year. With inflation figures building again, maybe the economy isn’t stabilising as was previously thought. The release showed a drop off against the pound of a cent, giving some good opportunities for those with sterling to buy up CAD.
Today is our turn, as we have a raft of inflation figures released early doors, followed closely by EU inflation shortly after. The day is then peppered with a few ECB member speeches.
Inflation came out down from last month at 10.1 percent, but not by much helped by an ease in fuel costs but hampered by souring food inflation, which sits at 19.2 percent. Given inflation is still the wrong side of double digits, it gives further credence that we will see another interest rate rise for the UK, which has given the pound a slight boost this morning. We open half a cent up against the euro and US dollar. Given on GBP/EUR we have been rangebound for months, and we are edging towards the top of that range, it could be a great opportunity for those with a euro requirement.
With much focus on inflation and interest rates giving the guidance for sterling, today is important for those looking to buy currency over the coming days and weeks, so contact one of the team for some friendly guidance today.