Much like with Tuesday’s inflation reading, the pound could only get a minor boost from Wednesday’s jobs report.
Though there were some positives in the latest jobs figures, namely the 2.5% rise in wage growth (including bonuses), there wasn’t a huge amount of celebrate. Even with that increase in the average earnings index, that still means real wages have shrunk for 8 months in a row, something likely to have a knock-on effect on the Christmas performance of the nation’s retailers. And while unemployment dropped by 26k between July and October, the number of people in employment actually fell by 56k – the sharpest decline since May 2015 – with a 5.9k jump in those claiming jobless benefits in November.
Sterling just about chose to look on the bright side, rising 0.2% against both the dollar and the euro. Despite this the FTSE managed to eke out its own 0.1% increase, taking it to 7500-plus levels not seen in over a month.
Cable’s gains are likely less to do with the UK jobs report, and more to do with the greenback’s pre-Fed jitters. The dollar is also down 0.1% against the euro and 0.2% against the yen, with investors unsure whether the Federal Reserve will issue a hawkish or dovish statement alongside its near-guaranteed interest rate hike. The central bank’s tone might be influenced by this Wednesday’s US inflation reading, with the figure set to jump from 0.1% to 0.4% month-on-month.
Regardless the Dow Jones is taking all this in its stride. The US index is set climb 20 or so points when the bell rings on Wall Street, and is only a handful of points from striking yet another 24500-plus all-time high.
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