Britain’s job market is defying uncertainty but wages growth is still sluggish, suggesting the Bank of England will tread carefully on Thursday with any signals about when it may finally raise interest rates. The Office for National Statistics said the unemployment rate unexpectedly fell to 4.3 percent in the three months to July, helped by the strongest job creation since 2015. But wages rose by a modest annual 2.1 percent, weaker than a forecast of 2.3 percent . The pound was sold off on the back of the data as this figure reduced the likelihood that the BOE will significantly strengthen its message that a rate hike could come sooner than markets have been anticipating.
Only two BoE policymakers have been voting for an immediate rise in rates from a record low of 0.25 percent back to 0.50 percent, their emergency level for almost all of the decade since the global financial crisis. However, most economists do not expect a rate rise until 2019. They think inflation will move only a little higher before slowly fading next year as Britain’s economy is subdued by the approach of its divorce from the EU in 2019.
U.S. producer prices rebounded in August, driven by a surge in the cost of gasoline, and there were also signs of a pickup in underlying producer inflation. The Labor Department said on Wednesday its producer price index for final demand increased 0.2 percent last month after slipping 0.1 percent in July. Economists said the uptick in producer prices was unlikely to appease Federal Reserve policymakers' concerns about low inflation as the increase was largely due to a 9.5 percent increase in the cost of gas. However, gas prices could rise further in September in the wake of Hurricane Harvey.
12:00 – GBP: BoE Interest rate decision Expected to remain unchanged at 0.25%
12:00 - GBP - Monetary Policy Summary
12:00 - GBP - MPC Official Bank Rate Votes
13:30 – USD - CPI MoM; Forecast at 0.3% against previous of 0.1%
13:30 – USD - Core CPI MoM; Forecast at 0.2% against previous of 0.1%
13:30 – USD - Unemployment Claims; Forecast at 303K against previous of 298K