- Pound (GBP) falls as wage growth slows to 6.5%
- Unemployment holds steady at 3.7%
- Euro (EUR) rises as Spanish inflation looks sticky
- ECB rate decision is due on Thursday
The Pound Euro (GBP/EUR) exchange rate is falling, snapping a four-day winning run. The pair rose 0.38% in the previous session, settling on Thursday at €1.1359, after trading in a range between €1.1281 – €1.1366. At 05:45 UTC, GBP/EUR trades -0.09% at €1.13431.
The pound is falling lower after UK labour market data showed that wage growth slowed as unemployment remained near a record low. UK wage growth slowed to 5.7% in the three months to January as rising economic uncertainties made employers more cautious about hiring.
Meanwhile, the unemployment rate remained at 3.7%, defying expectations of a rise to 3.8%, remaining close to record lows. However, there was some further sign of the labour market starting to slack Vacancies fell for an eighth straight month.
The Bank of England will be pleased to see that wage growth is slowing as policymakers have been concerned that higher wage growth could feed into a wage inflation spiral, making it harder to bring back inflation towards the Bank of England’s 2% target level.
The clear slowdown in wage growth strengthens the case for the Bank of England monetary Policy Committee to keep interest rates on hold when they meet next week.
The year I’m it’s fishing higher in a data quiet session and as investors continue to digest the fallout from the collapse of the Silicon Valley Bank. The selloff in European equities has calmed for now.
On the data front, Spanish inflation rose in February to 6% year on year up from 5.9% but down from the preliminary 6.1% level. Core inflation rose 7.6% year on year up from 7.5% in a sign that inflation is proving to be sticky.
Attention is turning to the ECB meeting on Thursday, where the central bank is widely expected to raise interest rates by 50 basis points. Although what comes next is looking questionable.