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UK wages outstrip prices as Brexit squeeze runs its course

UK wages outstrip prices as Brexit squeeze runs its course

However, the downside impact of this upon the Euro to Pound (EUR/GBP) exchange rate has been muted by a cool response from markets to the latest United Kingdom wage growth data.

Tom Stevenson, investment director for personal investing at Fidelity International, said: "Wage growth has been the missing piece of the puzzle in Britain's long, slow recovery from the financial crisis". Sterling weakened as the data showed wages in the three months to February rose by 2.8 percent, unchanged from the growth rate in the three months to January and below a median forecast of 3.0 percent in a Reuters poll of economists.

However, markets may be concerned that the drop in unemployment wasn't sufficient to boost overall wages already, which could signal a disconnect between employment levels and pay growth.

Some economists warn that the headline figures do not account for a significant increase in part-time work rather than full-time, a possible reason for the recent lack of strong wage growth.

Low-impact Eurozone construction output figures are the only other ecostats due for release tomorrow, which means that Pound Sterling could be left in charge of the GBP/EUR exchange rate, given the importance of the day's United Kingdom economic data.

Pentagon: Syria strikes put chemical weapons program back years
Bush infamously used in 2003 , after the USA -led invasion of Iraq. Other strikes targeted an army depot near Homs. As he spoke, explosions rocked Damascus.

The unemployment rate unexpectedly fell to 4.2% in the three months to February, hitting the lowest level seen since 1975. "As such, we continue to think that the MPC will hike rates three times this year, more than markets expect - with the next hike coming in May", Gregory predicts.

The pound was worth 153.66 against the yen, 1.3797 against the franc, 0.8631 against the euro and 1.4364 against the greenback as of 4:25 am ET. Instead, wage growth is edging up nicely as the degree of mismatch between the skills of the remaining workers and the skills demanded by firms increases'. What is clear however, is that a failure to raise rates in May will be bad for Pound Sterling.

It is not yet clear whether the steeper than expected fall in consumer prices will be enough to encourag the BoE to "wait and see" for a few more months before raising rates again, or if it will be minded to go ahead out of concern over the faster pace of wage growth.

Tuesday's wage data adds fuel to the argument that the Bank of England will likely increase interest rates at the next meeting of its Monetary Policy Committee in the first week of May.


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