Mixed labour data from the UK helped sterling maintain its strong position against the US dollar and push higher against the euro. Labour data out of the UK saw a positive fall in unemployment to 6.5% – the lowest since 2008; however, a sharp drop in wage growth saw sterling fail to push higher against the US dollar. This lack of growth could see consumers be more cautious with their spending, dampening retails sales, particularly as inflation rose more than expected in July. Moreover, it may force the Bank of England (BoE) to push back the expected rate hike until later in the year.
Performance against the euro was more encouraging throughout the day, as we saw sterling push onto a fresh 22-month high. With the economic recovery in the Eurozone lagging behind the UK and the US, it is not surprising that the euro should be struggling lately.
Sterling started this morning on the back foot, weakening against the majority of its most traded currencies after the London Stock Exchange open. It is scheduled to be a relatively quiet day for sterling, with no major economic data releases from the UK. Focus will instead turn towards the US, where the release of unemployment claims provides a lagging, but influential, indicator of economic health.