020 7898 0500Yesterday saw sterling hovering around the US$1.33 mark as it continued its recent strengthening. That was until the release of UK average weekly earning figures which showed they rose by just 2.1% per year in the quarter. Although unemployment claims came in at their lowest figure since 1975, there was some alarm that inflation continues to outpace wage growth by quite a margin.
The dip in the pound following the Brexit vote is having an impact on the UK economy and, while more and more UK businesses are employing people, those workers are becoming poorer as salary increases are not occurring. The signs of a struggling economy have led to increased expectations that the BoE will keep interest rates on hold when they meet later today.
However, it will still be interesting to see how the Monetary Policy Committee vote and what the voting split is. Markets will be focused on any indication of future tapering of quantitative easing and we could see some sterling volatility as a result.
