GBP/USD Exchange Rate Accelerates as UK Wage Growth Strikes 10-Year High
The Pound US Dollar (GBP/USD) exchange rate rallied on Tuesday, recouping some of Monday’s losses as some upbeat UK wage figures and easing Brexit concerns.
At the time of writing the GBP/USD exchange rate has risen roughly 0.4% so far today, going some way to pull back some of the losses seen on Monday when the pairing dropped to a new 20-month low.
Pound US Dollar (GBP) Exchange Rates Climb on Strong Wage Figures
The Pound (GBP) mounted a tentative recovery on Tuesday overcoming its recent Brexit angst as markets welcomed the UK’s latest jobs report.
While GBP investors welcomed a sizable upswing in employment last month, it was November’s accompanying wage growth figures that really impressed markets, with the ONS reporting that wage growth surged to 3.3%, a new 10-year high.
It’s hoped that the recent uptrend in wage growth will be noted by the Bank of England (BoE), with investors hoping it could prompt a rate hike next year so long as some Brexit clarity is forthcoming.
October #earnings data will highly likely fuel belief within #BOE #MPC that tight #labour market is finally having increasing upward impact on #pay. However, #interest rate hike before #UK leaves #EU next March remains highly unlikely given heightened #Brexit "deal" uncertainties https://t.co/ahsBuTfN9E
— Howard Archer (@HowardArcherUK) December 11, 2018
US Dollar (USD) Softens as Trade War Fears Ease
At the same time the US Dollar (USD) is on the defensive today, relinquishing some of yesterday’s gains amid suggestions of a possible breakthrough in the US-China trade dispute.
Reports emerged this afternoon that Beijing is making moves towards cutting tariffs on US car imports from 40% to 15%.
It’s hoped the concessions from China will help to keep the trade dialog between the two countries civil, despite a recent diplomatic spat over the arrest of a senior executive from Chinese telecoms giant Huawei, with the easing tensions softening demand for the safe-haven US Dollar.
GBP/USD Exchange Rate Forecast: Can May Rescue Brexit Deal?
While the UK wage figures may have provided the Pound US Dollar (GBP/USD) exchange rate with some brief relief from Brexit this morning, movement in the pairing through the remainder of the week is likely to be driven almost entirely by Brexit developments.
Theresa May is currently meeting with a number of her EU counterparts in a last ditch attempt to save her Brexit deal after conceding that in its current form it would have been rejected by MPs.
However Sterling is likely to face some significant losses should she fail to win any concessions from the EU as it greatly increases the risks of a no-deal Brexit.
Meanwhile USD investors will be focused on the upcoming US CPI figures, with an expected dip in inflation likely to drag on the US Dollar as it further strengthens the case for the Federal Reserve to pause rates in 2019.