British Pound Drops a Tiny Amount in the Morning
Morning GMT: the pound slid about 0.07%, trading at 1.28068 against the dollar. It’s a modest slide that follows the recent peak the currency hit last July.
Why the Slip?
- Wage Growth Slowdown – For six straight months, UK salaries have been ticking over slower, with the Average Earnings Index plus Bonuses marking a 5.6% rise (vs. the 5.7% forecast) for the quarter ending January.
- Employment Uncertainty – Unemployment bumped back up to 3.9% in January, a notch above the 3.8% expectation. Jobless claims climbed for the third month, hitting 16.8 k in February.
Implications for Future Policy
Experts say that this wage‑and‑employment slowdown still leaves room for the Bank of England to consider a rate cut in August, potentially trimming rates by a total of 75 basis points over the year. The market’s muted reaction to the data backs this view.
With wage growth no longer as hot a driver of inflation and energy prices cooling, the Bank believes it can keep price growth within its 2% target in the near term.
What’s Next for the Market?
All eyes are on the US February CPI, where inflation is set to rise to 3.1%. If inflation ticks up again, the pound may face more pressure to correct, and investors could start hoping the Fed will cut rates in June—or even May.
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