There’s been more gains seen in sterling this morning with the market jumping back above the $1.32 handle following the release of the latest employment data from the UK. The wage figures for August in particular are supportive of the pound with average earnings ex-bonus unexpectedly rising to 3.1% in annualised terms, from 2.9% previously. This is the highest pace of growth in wages since January 2009 while the unemployment rate held at a 43-year low in what is an all round solid report for the pound.
There has been an underlying strength in sterling this week despite negative developments no the Brexit front as far as reaching a deal is concerned, with the pound recovering steadily after starting the week on the back foot. Comments this morning from a German official that talks are on track to meet a November time-frame are another pleasing development but there remains some significant hurdles to jump first.
Economic releases on inflation (Weds) and retail sales (Thurs) could provide further good news for the pound, but the main driver remains Brexit negotiations and unless there’s positive news on this front in the coming days then the upside appears to remain limited.