Tough Trading Forecast for Pound Sterling GBP Exchange Rate Today

January 21, 2015 - Written by John Cameron

STORY LINK Tough Trading Forecast for Pound Sterling GBP Exchange Rate Today

This morning’s UK labour market data was generally viewed by market commentators as being positive in tone, but that hasn’t been enough to stop Sterling sliding against the other sixteen most actively traded global currencies during today’s session.

Strong UK Jobs Figures

The eagerly-anticipated monthly jobs figures have revealed that the overall British rate of unemployment dropped to its lowest level in six years at 5.8%, suggesting that the domestic economic recovery is gaining traction. The Office of National Statistics numbers showed a greater than anticipated drop in the total number of unemployed Britons during the three months to the end of November.

UK Wage Increases Disappoint

However, Sterling has endured sustained losses across the board thanks to two separate pieces of bad news. A lot has been written about the UK’s ‘cost of living crisis’ in recent months; there had been some grounds for encouragement on this subject during the latter part of last year when, for the first time in years, the pace of monthly UK wage growth eclipsed the monthly increase in the rate of inflation. The month-by-month British wage increase data has, for this reason, become a key release in recent times. Today’s version of the number showed an increase of UK take home pay of some 1.8% - somewhat below analysts’ estimate of a 1.9% result. Sterling gave up ground as a consequence as investors priced-in lower than anticipated disposable UK incomes moving forward.

Bank of England Unanimously Against Interest Rate Hike

The second blow for the Pound came in the form of the revelation that the bank of England’s monetary policy committee had unanimously voted against an interest rate increase earlier this month. Policymembers Weale and McCafferty had voted in favour of a rate hike since August’s meeting, but ditched their objections to keeping Base Rate at its current record low of 0.50% thanks to the sharp fall in the price of a barrel of crude oil since Summer. Although this morning’s minutes of the January BoE get-together showed that the pair’s decision had been ‘finely balanced’, the memos of the latest policy meeting suggest that it may well be 2016 before the Old Lady of Threadneedle Street considers it appropriate to tighten its monetary policy. Analysts forecast that support for the Pound is likely to be anchored in the meantime.

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TAGS: Currency Predictions Pound Sterling Forecasts