The latest UK jobs report proved to be an adequate distraction from the Brexit headlines, allowing for a perkier performance from the pound than the political situation between the UK and EU would suggest.
Almost all the attention – as has tended to be the case for a while now – was on wage growth. Building on the surprise jump revealed last month, basic pay unexpectedly rose 3.1% for the 3 months to August, the best reading since the dark days of the financial crisis 9 years ago. Including bonuses, meanwhile, total pay was up 2.7% against the previous month’s 2.6%. And while, yes, inflation was at 2.5% in August, that still meant real wages were allowed a bit more space to grow.
Given the proximity of the last hike back in August, and the ongoing Brexit uncertainty, it is highly unlikely that this wage-surprise will push the Bank of England to an earlier than forecast 3rd post-crisis interest rate rise any time soon. Nevertheless, the pound was willing to take the good news where it could get it; against the dollar it climbed half a percent, returning cable to $1.3215, while against the euro it was up 0.6%, flirting with €1.142. This, in turn, meant the FTSE was forced back towards 7000, the UK index drifting 20 points lower.
As for the US open, after Monday’s eventual dip the Dow Jones is looking to rise 100 points after the bell rings on Wall Street, a move that would put the index back in the ballpark of 25350. There’s no real market-moving data on offer this afternoon, so trading could be dependent on any macro-developments, from the US-China trade war to the tensions between Saudi Arabia and the rest (or should that be West) of the world.
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