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After soaring to a 15-month high against the US dollar yesterday, the pound later rose to an 11-month high against the euro, coming out on top of the three major currencies.
The pound ended the working day 0.51% up from Monday, while the GBP/USD rate is currently trading over 8% higher than this time last year.
Sterling’s boost against the euro followed data from the Office of National Statistics that showed average pay rose by 7.3% year-on-year in the first quarter of 2023 – the joint highest reading on record.
This comes as cross-industry workers have sought pay rises in order to keep up with the rising cost of living. Meanwhile, UK unemployment rate rose 4% in the three months to May, up from 3.8% in the previous period.
Chancellor Jeremy Hunt said, “Our jobs market is strong with unemployment low by historical standards. But we still have around one million job vacancies, pushing up inflation even further.”
In the news, a US judge ruled that Microsoft may proceed with its $69bn deal with videogame creator, Activision Blizzard following a request from the Federal Trade Commission.
Chief executive of the Financial Conduct Authority (FCA) Nikhil Rathi is to highlight the risks against AI scams later today. He’s expected to say, “As AI is further adopted, the investment in fraud prevention and operational and cyber resilience will have to accelerate simultaneously,” as reported by The Guardian.
The NFIB business optimism index in the US rose to a seven-month high of 91 in June, exceeding expectations of 89.9.
The ZEW indicator of economic sentiment for Germany dropped to -14.7 in July from the May reading of -8.5. The rate fell more than market expectations as morale hit its weakest level since last December as investors predicted further worsening of economic sentiment due to rising short-term interest rates.
Today is a quiet one for UK and EU data, but US investors await core inflation figures for June, which are expected to rise 0.3% month-on-month and to 5.0% year-on-year.
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GBP: Unemployment up, wages increase
A mixed labour report revealed the unemployment rate increased to 4% while there was an improvement in wage growth, thus putting pressure on the Bank of England to raise interest rates further. Average weekly earnings rose by 6.9% year-on-year, surpassing forecasts of 6.8%.
GBP/USD: the past year
EUR: Two-month high against the dollar
The euro strengthened to a two-month high against the US dollar yesterday despite data showing a slowdown in economic growth. In Germany, the annual inflation rate rose to 6.4% in June, from May’s 14-month low of 6.1%, still well above the European Central Bank’s target of 2%.
USD: Fed comments boost US stocks
Key US stocks the S&P 500 and the Nasdaq both added 0.3% yesterday as investors welcomed comments from central bank officials suggesting that the end of rising interest rates may be in sight.
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