The Pound rose earlier this morning after the latest wage growth data was released by the Office of National Statistics (ONS).
The data reported that basic wages within the UK grew at a record pace in Q2 this year, as wages excluding bonuses were 7.8% higher than a year earlier during the same time period.
This is also the largest increase since records begun back in 2001, and it adds to the pressure on the Bank of England to try and bring down increasing inflation levels.
Tomorrow morning at 7am, arguably the most important release of the week for GBP exchange rates will be released.
The July inflation report will be released, and it’s expected to show a decline down to 6.8%, down from the previous figure of 7.9% in June. June’s figure came out below expectations, so the trend is downward although it remains substantially above the target level of 2% outlined by the Bank of England.
These kinds of data releases can impact the Pounds value, as they can influence future monetary policy to be carried out by the Bank of England to try and control inflation levels.
At the time of writing the markets are pricing in a 99% chance of a 25-basis point rate hike at the next opportunity in September. Markets are also pricing in a 55% chance of seeing the rate reach 6% by early next year so I think any deviations away from these predictions can influence the Pound’s value. This is why tomorrow mornings inflation data will be watched closely.
Retails Sales figures for July will also be watched closely on Friday morning, so there could be a busy end to the week for GBP exchange rates.
