Key Wage Growth Figures to Impact Pound

The Sterling remained flat this morning, as the FTSE 100 awaited key wage growth data. The pound is trading at $1.3175, and analysts expect that wage growth, excluding bonuses, will slip to 2 percent, lagging behind inflation. The pressure on households is increasing, and consumers have less disposable income in real terms.

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shareprices.com - Wednesday, October 18, 2017

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Meanwhile, the FTSE 100 has broken out of a losing streak, with consumer goods company Reckitt Benckiser being one of the few companies to slip, after cutting its sales forecast following the cyber attack in June.

Tuesday saw inflation rise to three percent, which should have helped to support the pound, but the currency sank, as the Bank of England’s governor did not give any clear indication on interest rates when he appeared in front of the treasury select committee.

The Sterling retreated by 0.8 percent on Tuesday, and remains flat against both the dollar and the euro. The new dovish stance of the bank - contributed to by the appointment of two new policymaters; Sir Dave Ramsden and Silvana Tenreyro - means that even if rates were to go up last month, there would not be unanimous support from the monetary policy committee. It could be argued that the bank has erred in its hastiness to alter the policy, and that this has contributed to the current inflation situation. The weakness, however, has helped to boost the FTSE 100 in the short term, while we wait for the new unemployment and wag growth figures.

 

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