13 May 2015
UK employment report and BoE QIR could support GBP strength – BTMU
FXStreet (Barcelona) - Today’s UK employment report might confirm tightening labour market conditions in UK, and BoE’s QIR might add to further support in GBP strength by maintaining a positive growth outlook, notes Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ.
Key Quotes
“The latest employment report is expected to reveal that labour market conditions have continued to tighten. Employment growth is expected to remain robust and the unemployment rate is likely to decline further moving closer to the BoE’s long-run equilibrium rate of around 5.0%. In last month’s report the single monthly measure of the unemployment rate declined sharply by 0.4 percentage point to 0.4% in 5.4% in February.”
“Tightening labour market expectations are expected to support higher wage growth. Average regular weekly earnings growth has accelerated over the last six months increasing by annualized rate of 2.8% compared to 1.6% in the previous six months. However, it has been dampened by weakness in bonus payments.”
“The BoE’s latest Quarterly Inflation Report is expected to provide some support for the pound as well by potentially bringing forward BoE first rate hike expectations. The BoE’s updated projections are likely to reveal modest upward revisions to the inflation outlook and economic growth outlook.”
“The recent rebound in the price of crude oil and lower assumed market interest rates are likely to increase estimated upside risks to their inflation target in the medium-term.”
“The market is currently expecting the first BoE rate hike by around the middle of next year. The BoE is likely to remain optimistic over the growth outlook viewing the recent slowdown as likely temporary.”
“The BoE will have to signal more strongly that rate hike expectations have been pared too much for the pound to strengthen materially.”
Key Quotes
“The latest employment report is expected to reveal that labour market conditions have continued to tighten. Employment growth is expected to remain robust and the unemployment rate is likely to decline further moving closer to the BoE’s long-run equilibrium rate of around 5.0%. In last month’s report the single monthly measure of the unemployment rate declined sharply by 0.4 percentage point to 0.4% in 5.4% in February.”
“Tightening labour market expectations are expected to support higher wage growth. Average regular weekly earnings growth has accelerated over the last six months increasing by annualized rate of 2.8% compared to 1.6% in the previous six months. However, it has been dampened by weakness in bonus payments.”
“The BoE’s latest Quarterly Inflation Report is expected to provide some support for the pound as well by potentially bringing forward BoE first rate hike expectations. The BoE’s updated projections are likely to reveal modest upward revisions to the inflation outlook and economic growth outlook.”
“The recent rebound in the price of crude oil and lower assumed market interest rates are likely to increase estimated upside risks to their inflation target in the medium-term.”
“The market is currently expecting the first BoE rate hike by around the middle of next year. The BoE is likely to remain optimistic over the growth outlook viewing the recent slowdown as likely temporary.”
“The BoE will have to signal more strongly that rate hike expectations have been pared too much for the pound to strengthen materially.”