UK Wages Finally Catch Up To Inflation

Yesterday we saw the release of UK unemployment data and average earnings which are two key indicators to the health of the UK economy. We have seen unemployment, up until recently, being the key target for the Bank of England with regards to when interest rates might start going back up. The target was 7 percent, but with this target being reached faster than expected and the BoE backtracking, this became less of a focus, which makes the reading of 6.9 percent yesterday not quite as influential as it would have been, although it was seen as sterling positive all the same.

Adding to this positivity was the average earnings figure which came out at 1.7 percent year on year. Despite missing the expectation of 1.8 percent, this was still in line with the recent inflation figure which is the first time this has been the case for 6 years. Finally what we earn is the same as the rise in the price of the everyday basket of goods, which will be music to the ears of the British public.

What did all this mean for those looking to make an international transfer?

Good news. The pound made gains across the board, gaining over half a euro cent and nearly a whole US dollar. In monetary terms for example, a $250,000 property in the Florida sun cost over £800 less by the close of trade.

 Meanwhile over in Canada, the RBC held interest rates amidst inflation concerns which led to some further weakening of the Loonie. Adding this to the pounds earlier strength, we saw gains of nearly 1.5 cents on GBP/CAD.

 

As the week draws to a close ahead of the extended Easter bank holiday weekend across the globe, we may see some profit taking of the pounds recent gains. Be careful not to hold out to gain that extra inch only to lose a mile if you have a transfer to make this month. It’s a quiet day for the UK with no data releases here and just the low key PPI figure from Germany to contend with. Inflation figures from Canada at lunchtime could help or hinder the struggling Loonie while early afternoon stateside gives us jobless claims data.

From all at Currency Index, have a great Easter weekend.