The pound took a bit of a battering yesterday, as September’s unexpectedly poor employment report triggered a fall.
However, given its recent strength, GBP/EUR’s fall of three quarters of a cent meant it only retreated to where it ended last week. Against the US dollar, the pound ended yesterday’s session at its lowest level since the beginning of August.
The combination of rising unemployment and higher wage growth left markets questioning what the Bank of England will do at its next decision point on 19 December. The snap conclusion seems to be an increased likelihood of another interest rate cut.
Average earnings drew particular attention. Excluding bonuses, UK workers recorded an average annual pay rise of 4.3% in the past three months, well above the expected 3.9%.
There will be plenty more data for the BoE to chew on before then though, including GDP (gross domestic product) on Friday and inflation next Wednesday.
If that data adds to a worsening economic picture the pound could well fall further. So if you have an important currency trade coming up, do consider locking in your rate with a forward contract. Just call your account manager on 020 7898 0541.
Against other currencies the euro generally weakened. The German ZEW economic sentiment study provided more bad news, falling to 7.4 in November after bouncing back last month. Much of the gloom was generated by news of Donald Trump’s win. Economic perceptions of the USA increased, while those of the eurozone and China fell in the latest report.
