UK data looks good, one day before the big referendum: the unemployment rate fell to 6.2%, average hourly earnings rose by 0.6% (both in July) and Claimant Count Change is down 37.2K in August. All the data is better than expected. The MPC Meeting Minutes showed a 7:2 vote against a rate hike, exactly like the previous month. The rise in wage inflation is really good news for the UK.
GBP/USD was already on the move higher and it is now reaching a bit more: 1.6333 is the new high. Update: the pair is now sliding: it seems like a case of “buy the rumor, sell the factâ€. Nevertheless, it holds on to 1.63.
Good data
Previous data was revised to the upside as well: Claimant Count Change (or jobless claims) for July now show a fall of 37.4K. The drop in wages for July is now only 0.1% instead of 0.2% originally reported. This makes the 0.6% even stronger.
The UK was expected to report a drop of 29.7K unemployed in August after 33.6K in July (before revisions). The unemployment rate for July was expected to drop to 6.3% in July from 6.4% in June. The Average Earnings Index was expected to rise by 0.5%, in July after dropping by 0.2% last time. Wage inflation is becoming critical to UK policymakers.
MPC Unchanged
The tone of the MPC minutes is not different than in previous months: a gradual rate rise is expected when the time comes. However, at the moment there isn’t sufficient price pressure to justify a rate rise. This is Governor Mark Carney’s general line.
The Monetary Policy Committee Meeting Minutes were expected to show another split vote regarding the rates: 7 in favor and 2 against. When Weale and McCafferty voted for a hike for the first time in August, the pound certainly enjoyed it.
Scotland and the pound
GBP/USD was trading higher towards the publications, rising above 1.63 and reaching 1.6320 after recent opinion polls in Scotland showed the No vote in the lead, albeit with a small margin.
These are usually very important releases that rock the pound, but the impact may be somewhat smaller given the historic referendum on Scotland tomorrow.
Scotland Referendum: Timetable for forex traders
