The Great British Pound is slightly stronger this morning when valued against the US Dollar, trading a 24 hour high of 1.3570. Looking ahead this week and all eyes will be on Tuesday’s employment data release which is expected to remain steady at 4.2 percent. Wages are forecast to have posted a modest advance in the three-month to March, coupled with easing inflation, should further dent chances of any future interest rate hikes. The GBP/USD pair is currently trading at 1.3543. We continue to expect support to hold on moves approaching 1.3490 while now any upward push will likely meet resistance around 1.3580.
The week kicks off with the UK’s wage growth figures on Tuesday as well as the latest jobs numbers. Following on from a particularly disappointing week last week for the sterling, we may have to see a sharp jump in these figures for there to be a rebound for the currency. However, the importance of these figures should not be understated, wage growth in particular. From the back end of last year until very recently both the market and the Bank of England wanted to see the real wage growth deficit to narrow, and while this has finally happened, it was disappointing Q1 GDP figures at the final hurdle that meant the MPC kept rates on hold last week. Wage growth, therefore, remains paramount.
Market participants have maintained that the summer was meant to be relatively quiet for sterling with regards to Brexit headlines and importantly the downside risks that these bring. However, these headlines appear to be creeping back in more and more, and at the weekend Theresa May’s two options for a new customs policy both came under attack from within putting increased pressure on the Prime Minister and the pound.