23/01/2019 - Strong UK Employment Data Supports Pound

GBP

The pound surged on Tuesday of the back of strong economic data. Average weekly earnings saw its biggest increase since 2008 and rose by 3.3% on the year, well ahead of inflation. Furthermore employment figures were strong and the Office Of National Statistics said the number of people in employment continued to rise. Employment saw an increase of 141,000 which led to a record high 32.54 million in employment. The employment rate increased from a previous 75.3% to 75.8% which is the highest it’s been since estimates began in 1971. Consequently unemployment figures also decreased and are at its lowest level since 1975.

In terms of Brexit, Tory ministers are waiting to see whether May can produce a serious concession from Brussels regarding the Irish backstop. If May can reassure that a deal can be agreed with concessions over the backstop agreement, this could lead to May winning the support of Tory ministers who have previously rejected her deal.

European Commission’s Chief, Margaritis Schinas, said it was ‘pretty obvious’ that there will be a hard border if there was a no-deal Brexit. However the Irish Government have repeatedly said they will not accept a hard border. Irish Prime Minster Varadkar was quoted saying “Regardless of Brexit, the British government will always have responsibilities as co-guarantor of the Good Friday Agreement to ensure that, even in a no deal, there will not be a return to a border." Avoiding a hard border will be very difficult to achieve without a deal and the Irish government are not preparing for a hard border on their shores.

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