UK Pound Bounces Back – Small Step Up After Two Cold Days
After two consecutive dip‑days, the sterling has nudged up 0.17 % against the U.S. dollar. Economists are scratching their heads because the flip‑flop comes while wages are moving at almost a crawl and points keep popping up that maybe the Bank of England won’t hurry to cut rates.
Why the pound is holding its breath
- Average Earnings Index + Bonus slid to 4.0 % in the three months to July – the slowest pace since November 2020.
- Despite the wage drag, the job market popped: 265,000 jobs added, the biggest haul since May 2022.
- Jobless claims dipped to 23.7 k in August, far below the 95 k forecast.
So, even though the biggest inflation lever (wage growth) is losing steam, the pound’s rally is still on. The Bank of England’s rate cuts are expected to stay at a gentle pace, a view that’s getting some traction as gilt yields spiked on opening night.
What’s next? GDP, CPI, PPI and bank meetings on the horizon
The market’s eyes are glued to tomorrow’s July GDP release and sector performance. On the U.S. side, the CPI and PPI are slated to drop next week, which could put more pressure on bond yields.
Meanwhile, U.S. labor numbers keep bleeding out negative vibes, keeping the U.S. Treasury yields at record lows. In contrast, the UK gilts are becoming sweeter, widening the yield gap and giving the pound a decent boost against the dollar.
Wrap‑Up
So, if you’re watching the pound, the current consensus is that it’s inching in the right direction, but we’re still waiting to see what the next big data drop looks like. Keep an eye on the numbers, because the currency market can still surprise you.
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