It was all hearts and flowers for sterling yesterday when the employment and earnings data beat market expectations.
In particular, British bosses continuing to pay salary increases of 6.2%, way above inflation, will have suggested to the Bank of England that there is no need to lower interest rates any time soon. Hence sterling shot up again to its highest since August 2023.
But then this morning the newly announced inflation rate was slightly below expectations, so maybe the Bank should lower rates after all? It’s all on a knife edge and the pound responded by falling close to a two-month low against the US dollar this morning.
You could be forgiven for being a little confused. If one set of data points one way (a resilient economy) and another set points the other way (a failing economy), could GDP (Gross Domestic Product) settle the argument tomorrow?
If you are committed to a large currency transaction, the recent seesawing of sterling could take a decisive turn to the negative tomorrow when the Office for National Statistics releases the quarterly GDP figure and we discover if the UK is in a (technical) recession.
So please do call your account manager on 020 7898 0541 to discuss locking in today’s rate – still around an 18-month high against the euro.
