18 July 2018 ( Lagos ) : Sterling has offered a fairly muted response to the UK employment data report, despite it printing in line with market expectations.
The unemployment rate has remained at a record low of 4.2% during the three months to May, while average earnings rose by 2.5%. With the number of people in work rising to a record 75.7%, expectations may heighten over the Bank of England raising interest rates in August.
However, the fact that wage growth is at its weakest level since January could leave investors questioning whether the central bank will take action. When factoring in how Brexit uncertainty continues to weigh on sentiment, could markets be setting themselves up for another disappointment?
If UK interest rates are left unchanged in August, Sterling is likely to find itself exposed to downside shocks. Speaking of the Pound, the currency remains under pressure against the Dollar with prices trading around 1.3235 as of writing. A breakdown below 1.3190 could inspire a decline towards 1.3130.
Source: Lukman Otunuga, Research Analyst at FXTM
Reporting for EasyKobo on Wednesday, 18 July 2018 in Lagos, Nigeria
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