The Pound Sterling came under pressure after a US Dollar bounce, and because FX traders are waiting for a read on wage data which is due out on Wednesday. Analysts say that those figures are crucial to determining whether the Bank of England moves forward with a May rate increase. Earlier this month, Mark Carney, the Governor of the Bank of England, had said that rates were likely due to be hiked at a faster pace than previously estimated; as result, markets have already priced in the 80% likelihood of a rate increase in May. Analysts also say that, given that a rate hike has already been a factor of the Pound’s rise, there would have to be some other impetus for any additional gains, including more clarity over the Brexit discussion.
As reported at 10:42 am (GMT) in London, the GBP/USD was trading at $1.3994, down 0.01%; the pair has ranged from a session trough of $1.3932 to a peak of $1.4016. The EUR/GBP is trading at 0.88208 Pence, down 0.51764%; the pair earlier hit a low of 0.88100 Pence while the peak stands at 0.88300 Pence in this session.
UK Wages Outlook Murky
Analysts are predicting that UK average earnings (including bonus) for the 3-month period ending December will have been flat at 2.5%. One strategist in Denmark says that only a significant miss on the data would result in a repricing of the Pound. However, the BoE has pointed out in the past that a rise in wages would need to be seen before it considers raising interest rates. Thus, a miss on the wages data could result in a rethinking of the May rate hike forecasts.