GBP/USD: Softer UK labour data keeps BoE easing bias – TD Securities

TD Securities analysts project further loosening in UK labour conditions, with employment falling, unemployment rising to its COVID peak of 5.3%, and wage growth easing but still elevated. They note this backdrop has previously supported Bank of England (BoE) easing, though near term focus may shift to inflation implications from Iran-related shocks rather than domestic data alone.

Labour market loosening but wages elevated

"We see the UK labour market continuing to loosen, with the 3-month employment change dipping into negative territory at -20k (mkt: 14k; prior: 52k) and the unemployment rate ticking up to its COVID peak of 5.3% (mkt: 5.2%; prior: 5.2%)."

"This trend has previously supported easing by the BoE, though we expect it to take backstage for next week as the MPC assesses the impacts of the Iran conflict on inflation."

"Wage growth is set to remain elevated across all measures."

"We see headline AWE at 3.8% 3m/y (mkt: 3.9%; prior: 4.2%), the ex-bonus measure at 4.0% 3m/y (mkt: 4.0%; prior: 4.2%) and private earnings ex-bonus wage growth moving up to 3.5% 3m/y (mkt: 3.5%; prior: 3.4%), albeit largely on the back of base effects."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)