GBPUSD is trading upwards; investors are analyzing the results of macroeconomic reports.
The British Pound is rising against the USD on Tuesday afternoon and has already passed the highs it reached in January. The current quote for the instrument is 1.4344.
According to today’s reports, the Unemployment Rate in the United Kingdom fell up to 4.2%, which is the lowest level since 1975. At the same time, the Average Earnings Index increased by only 2.8% 3m/y, the same as three months ago, although the indicator was expected to add at least 3.0%.
If it hadn’t been for Earnings, which are still quite far away from the inflation and positive readings of the unemployment, the Pound would have skyrocketed today to new highs and stayed there. However, the slowdown of the Average Earnings Index may become a real problem: employers have to compete for highly qualified staff, otherwise the sector may fall into stagnation sooner or later.
In case of low dynamics in Earnings, there won’t be positive movements in both the Retail Sales and the Household Spending. However, it is very unlikely to prevent the British regulator from increasing the key rate when the time comes. There are speculations on the market that the benchmark rate might be increased as early as in May, because the British labor market is stable. Still, one should remember that the Bank of England is very conservative in its monetary policy and won’t make any significant moves until it is sure that nothing threatens the country’s economy.
RoboForex Analytical Department