The pound launched into life yesterday following an encouraging UK employment report for May.
The unemployment rate remained steady at 3.8% but the amount of individuals claiming benefit decreased while the 3-month level of employment increased by 32K up to the end of May. In addition, wages grew from an expected 2.9% year-on-year to 3.1%. An encouraging jobs report from all perspectives.
The pound moved higher on the back of this data. $1.27 was recaptured against the buck whilst sterling began to make inroads into the €1.12 handle, pushing toward the €1.1250 level. There were also a number of BoE Monetary Policy Committee members speaking yesterday. Some of the comments were supportive for GBP, notably from Mr Saunders, who stated that interest rates may rise faster than the market is currently pricing. Many participants will be monitoring the pound closely today to see whether it can build on its gains or continue to remain pressured by Brexit concern.
Today’s economic calendar is all about the US and their latest consumer price index reading. This is one of the most widely recognised measures of inflation and is one which the Fed take very seriously. The release will cross the wires at 1330 and could create significant volatility across US dollar pairs. The report is expected to show a year-on-year drop to 1.9% from 2%.
Written by Viv Savani. 8:42am, June 12th 2019
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