Created
: 2024.10.16
2024.10.16 20:20
Yesterday's UK employment data underlined once again why markets are quite bullish on the Pound Sterling (GBP): job growth was very strong, surprisingly pushing the unemployment rate down to its lowest level in half a year. Wage growth slowed, but including bonuses it slowed slightly less than expected. So the UK labor market seems to remain very solid and does not require an urgent interest rate cut, Commerzbank's FX analyst Michael Pfister notes.
"This is likely to have been an outlier, as most of the increase was due to an extraordinary rise in travel prices - seasonally adjusted, these prices rose by almost 2% month-on-month, the highest level since the beginning of 2022. As in other European countries, this could be linked to Taylor Swift's world tour. She gave five concerts in London in August, which probably pushed up airfares and hotel prices significantly."
"This effect is likely to be partly reversed in September. Accordingly, service prices should have risen at a much slower pace, i.e. they should have returned to the trend in wage growth. This is also supported by the fact that only travel prices rose exceptionally strongly in August. Other components of services inflation, such as prices for recreation and culture, are more closely linked to wage growth and have risen at a much slower pace. In short, there is much to suggest that the brief upward blip in August will be smoothed out."
"We believe that a more gradual pace of rate cuts is more likely, which should support the pound in the coming months. However, the risk of faster rate cuts is also rising in the UK, especially if inflation turns out to be significantly lower than expected. If we see this today, we could see a sharp correction in Sterling, although this is not our base case."
Created
: 2024.10.16
Last updated
: 2024.10.16
FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.
We hope you find this article useful. Any comments or suggestions will be greatly appreciated.
We are also looking for writers with extensive experience in forex and crypto to join us.
please contact us at [email protected].
Disclaimer:
All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.
The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.
Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy