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Disappointing UK Wage Growth Fails to Dent GBP/USD Exchange Rate

GBP/USD Exchange Rate Buoyed Following UK Employment Data

The Pound US Dollar (GBP/USD) exchange rate is firming this morning in spite of the UK’s latest jobs report revealing a sharp slowing of wage growth in December.

At the time of writing the GBP/USD exchange rate is trading at around $1.3034, slightly up from this morning’s opening rate.

Pound (GBP) Steady Following UK Jobs Report

The Pound (GBP) is holding its ground against the US Dollar (USD) this morning, following the publication of the UK’s latest employment figures.

According to data published by the Office for National Statistics (ONS), the UK’s unemployment rate held at a 44-year low of 3.8% in December, as total employment rose to a new record high.

But for GBP investors the real focus was the accompanying earnings figures, which revealed UK wage growth slumped from 3.2% to just 2.9%, its slowest pace in over a year.

However the poor wage growth figures appear to have had only a limited impact on Sterling sentiment this morning.

This is due to real wages rising back above their pre-economic crisis levels in the last quarter of 2019 as inflation slumped to a three-year low.

Elsewhere, the Pound is finding some modest support from the announcement that the next UK Budget will be delivered on 11 March despite the shock resignation of Sajid Javid as Chancellor.

GBP investors are hoping that the Treasury may be willing to loosen the purse strings a little more under new leadership and that an expansionary Budget will help to boost UK economic growth and take the pressure off of the Bank of England (BoE) to cut interest rates.

Coronavirus Fears to Continue to Buoy the US Dollar (USD)?

Meanwhile, the US Dollar (USD) looks to remain well supported so long as markets remain preoccupied by the coronavirus outbreak in China.

The latest development to spook markets is a revenue warning from Apple, with the tech giant warning it won’t hit its financial targets due to the ongoing crisis.

Apple warned that the disruption caused by Covid-19 has resulted in a fall in iPhone production, and as such is already facing shortages.

Apple said:

‘Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated.

‘As a result, we do not expect to meet the revenue guidance we provided for the March quarter.’

The warning has feeds into concerns about how the virus may be impacting the global economy, with the resulting risk-off mood benefiting the safe-haven US dollar.