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Sterling Unimpressed By Real Wages Decline; FTSE Dragged Under

Published 15/11/2017, 11:42
Updated 21/10/2020, 09:15

Neither the pound nor the FTSE found much joy in the UK’s latest jobs report this Wednesday morning.

For the 3 months to the end of September wages (excluding bonuses) rose a better than forecast 2.2%, up from 2.1%. However, before anyone gets too excited, the UK’s eye-wateringly high inflation means real wages actually fell 0.5%, another blow to the wallets of the nation’s consumers in the run up to the economically-draining Christmas period.

Elsewhere, though the unemployment rate remained at 4.3%, the number of people employed in the UK actually dropped by 14k in the third quarter, the first time it has fallen in roughly a year.

As it has done for much of the week, the pound’s reaction to all this was differed against the dollar and the euro respectively. Against the former sterling sat flat, largely due to the greenback’s own issues; against the latter, however, the currency plunged a further 0.4%, causing the pound to approach a fresh 4 week nadir.

The FTSE, meanwhile, had other things on its mind. With a bloody commodity sector – triggered by a 1.4% drop by Brent Crude and a near half a percent fall from copper – the UK index shed 45 points as the day went on, taking it the wrong side of 7375 for the first time since the end of September.

Looking to this afternoon and the dollar – which is down 0.4% against the euro and 0.6% against the yen – will be hoping for some decent data to rescue it from its current tax reform-doubting struggles. Sadly, the latest US inflation reading is expected to slip from 0.5% to 0.1% month-on-month, while the retail sales figure is forecast to drop from 1.6% to 0.0%. Though a Fed rate hike is more than likely in December, there is still time for a bit of doubt to creep in, something numbers like these won’t help avoid.

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