Pound falls despite wage growth beating estimates
Daily Currency UpdateGBP/USD is heading back towards 1.20 this morning as global economic jitters see investors seek the safety of the dollar. There was some mixed data from the UK this morning which saw wages rise 5.1% compared to the same period a year ago. Usually a jump like this would see the pound rally however given that inflation is currently at 9.4% it shows that wages are lagging well behind rising prices. There is also signs that although there are plenty of job vacancies in the UK at the moment, the number is starting to fall which is another concern for an economy that looks like it could be heading to a recession in the next few months. The next key data set is tomorrows latest inflation number from the UK which is expected to show the Consumer Price Index push up to 9.8% adding extra pressure to the spending power of UK households. GBP/USD is around 1.2030 with GBP/EUR at 1.1850
Key MoversAs mentioned earlier, the dollar has strengthened this morning as concerns over supplies of energy to the Eurozone see the shared currency sold off. EUR/USD is heading back towards 1.01 as low water levels in the Rhine river mean cargo ships cannot navigate through key sections if loaded to full capacity. The extra pressure this is putting on the economic health of the bloc is definitely not needed given the huge uncertainty over supplies of Russian gas which is causing wholesale prices to soar. Later this morning we get the German ZEW Economic Sentiment survey which is expected to print -52.7. Any figure below zero indicates more pessimism than optimism from survey participants. To highlight how downbeat respondents to the survey currently are, last months reading of -53.8 was even lower than March 2020 when Covid driven lockdowns were being implemented around Europe and the wider world.
It's a fairly quiet day from the States however tomorrow we get the latest Retail Sales numbers and the minutes of the last Federal Open Market Committee meeting where members decided to hike interest rates by 0.75%. EUR/USD is currently at 1.0160
- GBP/USD: 1.2000 - 1.2120 ▼
- GBP/EUR: 1.1795 - 1.1960 ▲
- GBP/AUD: 1.7100 - 1.7260 ▲
- EUR/USD: 1.0090 - 1.0210 ▼