Sterling jumped to the top of its range during this morning’s session as bumper wage data proved the catalyst after yesterday’s developments in the Parliament saw the Prime Minister try to push the same deal that was previously heavily defeated in the House of Commons. However, the suggestion that a ‘no deal’ Brexit will be avoided led to any Sterling moves being muted.
Tuesday mornings UK wage data was the real treat for Sterling bulls as the strong labour market data appeared to rubbish fears of general economic gloominess amid ongoing Brexit uncertainty. The headline data was that a 3.4% rise in wages, slightly ahead of market expectations at 3.3%, while the headline unemployment rate dropped to 4% from 4.1%. The positive wage picture could well give the Bank of England some ammunition once it ramps up its policy once again, this is currently on hold until the uncertainty of Brexit has passed, whenever that is.
The 3.4% wage growth rate is the highest we have seen since the financial crisis of 2008, but the positive numbers will be overshadowed by the ongoing Brexit saga. The chaos surrounding the UK’s exit from the EU is the only story that will give Sterling any real meaningful direction, and with another case of kicking the can down the road yesterday, time is running out for a resolution.
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