Wage hike signal hot inflation outlook
Strong wage growth of July and stable unemployment can increase consumer spirit and promote expenses. A pickup in consumer expenses can fuel demand-driven inflation, potentially delayed BOE rate cuts by 2026.
Today’s data followed the hot-to-adaptable inflation report of July. Britain’s inflation accelerated in July, further challenging expectations for ease of BOE policy. The annual inflation rate rose from 3.6% to 3.8% in June in July, with core inflation also climbed to 3.8% (June: 3.7%), above the 2% target of BOE.
ING economists suggested that today’s labor market figures and August inflation figures may revive hopes for the November deduction. But with the release of July, the focus has shifted to the upcoming August inflation report.
The current combination of high inflation and rising wages supports a close -term BOE policy hold. However, August inflation report, Wednesday, was scheduled for release on September 17, may change the story. Economists predicted the headline inflation to predict 3.8%, predicting to drop the underlying inflation to 3.6%. A sharp decline in inflation can promote the cut in November rate and weigh the GBP/USD pair.
GBP/USD response for UK Labor Market Report
Next to the Labor Market Report, GBP/USD fell to $ 1.35920 before it climbed $ 1.36251. After release, the pair jumped back to the first $ 1.36275. On Tuesday, September 16, GBP/USD rose 0.19% to $ 1.36249. The initial market reaction to rising wages and stable unemployment suggested merchants to cut Dowish Bo Bates.
