Sterling continued its strong form on Wednesday, following the release of better-than-expected average earnings data. The British currency pushed to one-month highs against both the US dollar and euro, and the surprise increase of 2.7% in average earnings suggests that slack in the UK economy is being taken up.
The minutes from the latest meeting of the Bank of England (BoE) showed that the Monetary Policy Committee (MPC) remained unanimous in their belief that interest rates should remain at 0.5%. However, two members of the committee were said to be ‘finely balanced’ when deciding whether to vote for a rate hike – so we could see this figure change in coming months. A number of the MPC also discussed their surprise with the lack of effect of low oil prices, meaning we could well see more members pushing for a rate hike should inflation continue to rise over the next few months.
Today sees the release of further consumer data, with May retail sales figures expected to show a fall from the previous month but to be fairly steady over the year.