UK Wage Growth forecast to fall and Trump's speech watched closely

12th April 2017 Market Update

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?? GBP - Trading in Sterling was muted in the morning as inflation came in unchanged from the previous month and as expected by the market at 2.3%.

Sterling did enjoy a small rally late on in the day, with markets citing the reason for the rush as a flight to safety, after a tweet from Donald Trump caught the attention of investors. Trump warned that “North Korea is looking for trouble” and that if China doesn’t help, the US “will solve the problem without them”.

In focus today will be February’s job report. Rate of unemployment forecast to remain at 4.7%, however hourly earnings are forecast to drop to 2.2% suggesting a fall in real pay (inflation being higher than wage growth). Sterling could take a hit, should the figures come in as expected, or should the figures suggest a larger fall in wage growth.

?? EUR - The euro remained extremely flat all day as expected, due to the lack of telling data released throughout the trading sessions. Today more of the same is expected, with the only notable data being Spanish inflation figures which has dropped from 3% to 2.3% - but no major moves off the back of this data.

?? USD - Following Trump’s tweet yesterday afternoon, the US dollar dropped across the board as markets unsurprisingly seem unsettled and sought cheaper safe havens.

Very little data expected with the only thing to note being the monthly budget statement out at 7.00pm this evening.


Key Announcements

?? GBP
9.30am – UK Unemployment Rate: Forecast to remain at 4.7%.
9.30am – Average Hourly Earnings (Inc Bonuses): Forecast to fall to 2.2%.

?? USD
7.00pm – Monthly Budget Statement.


Our View: UK employment is the only key data today, however the chances are we will follow trend of the last six months and market movement will be depicted by political matters.
Trump will be speaking today and will inevitably address Russia’s impact on the recent events in Syria. Relations could breakdown between the two superpowers and the US dollar may not be the safe haven currency as it has traditionally been, causing US dollar weakness and potentially Sterling and the euro to rally.


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