Sterling stuck at 2-week low as investors await UK jobs data

Sterling stuck at 2-week low as investors await UK jobs data

14 May 2019 03:38 PM

Sterling hit a two-week low on Tuesday ahead of UK employment data that investors will scrutinise for signs of how much British businesses are hurting from uncertainty over Brexit.

While most economic data in Britain has been solid in recent months even in the face of messy EU divorce proceedings, the worry for investors is that months of inventory stockpiling by British firms could show up this quarter.

There's a possibility that the labour market might fall back after all the recent stockpiling. We had quite a strong first quarter, and the feeling in the market is we might see that change in the second quarter.

Sterling was down 0.2 percent against the dollaron Tuesday to a two-week low of $1.2928 in early trade and down 0.25 percent against the euro at 86.89 pence.

The British currency is also being dragged lower by the broader environment, with trade tensions between the United States and China hurting stocks earlier this week.

He said that a strong number could push Bank of England rate hikes expectations up a little more but given the overriding environment he said he doubts investors will go too far down the "normalisation" road.

Expectations are for the data to show wages increased by 3.4% in the three months to the end of March compared to the same period a year earlier, according to a Reuters poll, a slight decrease from 3.5% the month before that.

The Bank of England has said in the past that a rate hike would be contingent on strong wage growth pushing up inflation.

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