Daily Currency Update
GBP/USD has pushed higher this morning as the latest wage growth data from the UK exceeded expectations. The monthly report from the Office of National Statistics showed that wages for the three months from July - September this year rose 7.9% compared to the same period in 2022. Although this was down from the previous reading of 8.2% a fall to 7.4% was pencilled in by the markets and this overshoot saw the pound rally in early trade. High wage growth feeds through to inflation and this will likely be of concern to policy makers at the Bank of England and will reinforce the view that interest rates need to be held at their current elevated levels well into 2024. GBP/USD briefly touched 1.23 around 7:30am shortly after the release however has since retraced a touch. GBP/EUR which was close to a six month low yesterday has also recouped some losses and is back up to 1.1475. Tomorrow sees the big domestic data of the week with the latest UK inflation numbers due at 7am. A sharp drop from 6.7% y/y to 4.7% y/y is predicted. We could see some big swings in GBP/USD later today as we await the latest US inflation figures.
Key Movers
As mentioned, the latest CPI reading from the States is due at lunchtime with the headline reading expected to drop back to 3.3% y/y from 3.7% y/y. As is usually the case if it comes in hot then we should expect the dollar to strengthen and if it misses target then we can expect the dollar to weaken which should be accompanied by a stock market rally. Its relatively quiet from the Eurozone today with the monthly German ZEW Economic Sentiment Survey the only publication of note. The closely followed survey is expected to push up to 4.9 from last months -1.1. Anything above zero confirms more participants are optimistic rather than pessimistic about the state of the German economy. EUR/USD sits around 1.07.
Expected Ranges
- GBP/USD: 1.2200 - 1.2370 ▲
- GBP/EUR: 1.1420 - 1.1560 ▲
- GBP/AUD: 1.9235 - 1.9400 ▲
- EUR/USD: 1.0600 - 1.0800 ▲