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Pound continues to decline today as wage growth continues to slow for the sixth time in a row

market analysis on behalf of Samer Hasn Market Analyst and part of the Research Team at


March 12, 2024 ( Newswire) The British pound fell slightly this morning, by about 0.07% against the US dollar, to the level of 1.28068, shortly after 7:00 a.m. GMT. This also comes with the correction that the pound is experiencing after it reached its highest levels since last July.

The continued correction of the pound today comes with the unexpected slowdown, for the sixth month in a row, in UK wage growth in addition to the unexpected return of unemployment to the rise in January.

The Average Earnings Index plus Bonuses recorded a slowdown in growth to 5.6% on an annual basis in the three months ending in January, which was slightly lower than expected at 5.7%, which also represents the sixth month of slowdown in a row since last August.

In addition, unemployment unexpectedly rose again to 3.9% in January, compared to expectations for it to remain stable at the previous reading of 3.8%. The claimants number continued to rise for the third month in a row, amounting to 16.8 thousand claims in February, which was also higher than expected.

However, I do not think that the slowdown in wage growth and the rise in unemployment today may modify expectations about the possibility of cutting the interest rate for the first time in August at least, and by a total of 75 basis points throughout the entire year. The markets' limited response to today's data reinforces this hypothesis as well.

Today's data may also reinforce the Bank of England's hypothesis that it is possible to control inflation within its 2% target during the next few months, as wage growth is the most important fuel for inflation growth now, after energy price inflation has receded.

Today, all eyes are on the February reading of the Consumer Price Index (CPI) in the United States. Inflation growth is expected to remain at 3.1%.

While the return of inflation to rise again may put more pressure on the pound sterling to continue its correction, while fueling hope that the Federal Reserve will cut interest rates next June or even revive hope for that in May.

More Info: Newswire

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