Home / Blog / Category / Fundamental Analysis / Rising Unemployment and Persistent Wage Growth Complicate Bank of England Decisions
14 May 2024 | FXGT.com

Rising Unemployment and Persistent Wage Growth Complicate Bank of England Decisions

  • Unemployment Rate: The UK’s unemployment rate slightly increased to 4.3% for the three months ending in March, aligning with market forecasts, and rising from the previous 4.2%.
  • Employment Change: Employment figures for March showed a decline, further illustrating a weakening labour market. The April data also confirmed a continuing negative trend in job creation, although there was a notable upward revision for March’s figures.
  • Wage Growth: Despite the weakening job market, wage pressures persist. Average weekly earnings, including and excluding bonuses, exceeded expectations and showed a year-on-year increase, suggesting that wage inflation remains a concern.
  • Market Reaction: The labour market data did not significantly influence the GBP/USD exchange rate, which remained stable around $1.2550 following the release. The consistency in wage growth amidst a rising unemployment rate presents a mixed signal, potentially complicating the monetary policy outlook for the Bank of England.
  • Implications for Monetary Policy: The current labour market data presents a mixed signal for the Bank of England (BOE), complicating its decision-making process regarding interest rates. While the softening job market might argue for a more dovish stance, the persistent wage growth could pressure the BOE to maintain or even raise interest rates to manage inflationary risks.
  • US Data Focus: Attention is now turning to the US Producer Price Index (PPI) due today. There’s a potential for this data to show higher-than-expected figures, which could strengthen the USD. Additionally, Fed Chair Jerome Powell speech later today could significantly influence market dynamics. These events will likely dictate the short-term trajectory for GBPUSD and broader market sentiment.
Help us improve this article.
Disclaimer: Any material and information included herein are intended for general marketing purposes only and does not constitute investment advice or recommendation nor an invitation to acquire any financial instrument and/or be involved in any financial transaction. The investor is solely responsible for the risk of his investment decisions and if considers appropriate, he should seek relevant independent professional advice before making any decision. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances or needs. Please read full Non-Independent Investment Research Disclaimer here. Risk Disclosure: CFDs are complex instruments and carry a high level of risk of losing money. Read full Risk Disclosure here .

Blog Search

Categories

Blog Categories

Tag

Blog Tags

Register and Share Buttons EN

Register

Loved our latest article?

Share it with your friends and followers!

Copied to clipboard
To top

Leveraged products may not be suitable for everyone and may result in loss of all your capital. Please ensure you fully understand the risks involved and whether trading is appropriate for you. Read Full Risk Disclosure here.