U.K. wages grew faster-than-expected in August according to the latest labour market statistics released by the Office for National Statistics, news that allowed Sterling to recover more of the losses suffered at this week's open.
The Bank of England's Chief Economist and prominent Monetary Policy Member Andy Haldane has told a gathering in London that the U.K. is seeing a "new dawn breaking for pay growth."
The Pound advanced further on rivals Tuesday after official data showed wage pressures building in the UK's tight labour market while traders also continued to reward signs of progress in the Brexit negotiations with a steady bid for Sterling.
A busy week of UK data releases kicks off today with employment and wage data due for release at 09:30 B.S.T.
Official data shows the UK economy continues to create jobs at a robust pace with May seeing a record proportion of the population participating in the labour market.
Pound Sterling erased earlier losses and advanced against the developed world currency basket Tuesday after the latest labour market report showed the UK economy continuing to create new jobs at a rapid clip in April, keeping the unemployment rate at a multi-decade low.
The British Pound firmed as a highly-anticipated set of labour and wage data broadly met expectatations.
The Pound pared earlier gains Tuesday as traders responded to a mixed labour market report, which showed wage packets growing slower than was expected in February, while the unemployment rate fell to a new 42 year low.
But businesses still proving reluctant to push pay rates higher, something the Bank of England is looking for to justify raising interest rates in 2018.
The Pound rose strongly against a basket of developed world currencies Wednesday as markets responded to the latest volley of labour market data, which showed UK wages growing faster than expected during January.
The outlook for Pound Sterling brightened Monday when an IHS Markit survey showed a rise in UK wage pressures during the current month, which is something that is sure to grab the attention of Bank of England rate setters later this week.
Unemployment may be at historic lows but that doesn't seem to be increasing pay, as traditional economic theory would suggest.
Wednesday’s data comes at a time when the unemployment rate has held at a 42 year low for five months and wages have seen their longest run of uninterrupted growth since before the financial crisis.
The UK is enjoying a heyday of full employment according to recent data and this will push up wages soon, say economists, but this may not be the whole story suggest examples from other countries.
Markets will now have one eye on the Bank of England after Wednesday's labour market data reinforced expectations that a pickup in wages is underway.
Permanent placements rise at quicker pace as temporary billings continue to expand sharply, meanwhile demand for staff moderates slightly but remains robust.
The squeeze on UK wage packets has eased. Markets will now focus on Thursday's Bank of England meeting and European Council summit.
UK labour market statistics form the economic highlight for Pound Sterling today.
Expectations for a Sterling-supportive reading from today's tranche of labour market data are low.
"The latest labour market figures provided some signs that the tightening in the labour market may be leading to a recovery in wage growth at long last."
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