Following the boost the positive wage growth data gave the pound yesterday morning, it was a rather calm day for other major currencies euro and US dollar.
The data revealed that UK wage growth accelerated in the three months leading up to December but remained below inflation. The growth in regular pay (excluding bonuses) rose to an annual rate of 6.7%, up from a revised 6.5% in the three months to November.
This morning UK inflation slowed by more than expected to 10.1% in January from 10.5% in December. Prices fell by 0.6% in January, well ahead of market expectations, putting inflation at a six-month low and strongly suggesting that price pressures have peaked.
Good news for householders and Bank of England interest rate setters, but the news has led the pound to fall sharply against the euro and US dollar, as hopes for further interest rate rises disappear. Sterling has lost approximately 0.5% since close of play yesterday.
US Inflation rate slowed to 6.4% in January from 6.5% in December, less than markets expectations of 6.2%. This is the lowest rate we’ve seen since October 2021.
Yesterday, John Cunliffe, deputy governor at the Bank of England said a ‘digital pound’ would be necessary to maintain the people’s trust in the UK monetary system. Speaking at UK Finance, Cunliffe spoke about “new forms of money” which could become more and more prominent in the UK.
He went on to confirm that The Bank is likely to propose a temporary limit on ‘digital pound’ holdings between £10,000 and £20,000.
In the business world, Ford the leading motor brand announced 1,300 jobs are to be cut from its UK business as part of a Europe-wide overhaul. This cut reflects a fifth of Ford’s UK workforce. It’s reported that most losses will be at the carmaker’s Dunton, Essex site.
Later today, markets expect to hear US retail sales data which is expected to rebound to 1.2% from -1.1% in January.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Personal Trader on 020 7898 0541 to get started.
