Wage Growth Soars
The latest set of UK labour market figures today appear to have all but confirmed a further BOE hike in September. Despite the unemployment rate ticking higher to 4.2% from 4% prior, wage growth, including bonuses, was seen soaring to 8.2% from 7.2% prior, marking the highest level since 2021. However, basic wage growth (excluding bonuses) was seen rising to 7.8%, its highest level since the ONS began collecting records in 2001.
Jobless Numbers Rise Again
The BOE has warned regularly this year over the upside inflationary risks linked to ongoing wage hikes. As such, this latest data will make disappointing reading for the BOE and certainly raises upside risks into tomorrow’s UK CPI data. In terms of employment figures, along with the unemployment rate rising to 4.2%, the employment change figure fell by 66k while the claimant count figure rose by 29k. Job vacancies are now at their lowest level since 2021.
CPI Due Tomorrow
On the back of today’s data, focus now turns to the upcoming UK CPI release tomorrow. If CPI is seen to have remained around prior levels or not fallen as much as expected, this will likely cement expectations of a further hike next month. However, the reaction in GBP might not be a bullish one with growth concerns now taking centre stage on the back of the NIESR forecast that the UK economy will fall into recession next year.
The correction lower in GBPUSD has seen the market breaking below the 1.2992 level as well as the bullish trend line from YTD lows. Price is currently stalled at the 1.2659 level support and with momentum studies bearish, risks are skewed towards a break lower down to 1.2437 next.