GBP
The pace of growth in British workers’ pay slowed in January, hit by fewer
bonus payments, while the percentage of people in work rose to an all-time
high. Britain’s unemployment rate was stable at 5.7 percent, matching its
lowest level in almost seven years but above a forecast for another fall to 5.6
percent from economists.

Annual growth in weekly earnings in the 3 months ending January dropped to 1.8%
from 2.1% in the 3 months ending December. However, growth in real earnings,

GBP
The pace of growth in British workers’ pay slowed in January, hit by fewer
bonus payments, while the percentage of people in work rose to an all-time
high. Britain’s unemployment rate was stable at 5.7 percent, matching its
lowest level in almost seven years but above a forecast for another fall to 5.6
percent from economists.

Annual growth in weekly earnings in the 3 months ending January dropped to 1.8%
from 2.1% in the 3 months ending December. However, growth in real earnings,
the goods and services that can be bought with earnings remains robust with the
last reading for inflation at 0.3% in January. 

Bank of England policymakers are concerned a further rise in sterling,
particularly against the EUR could leave inflation below target for longer. A
higher exchange rate could effect inflation because it makes it harder for
companies to sell overseas because of a rise in the cost of their goods.
Exporters then may choose to cut their prices to make their goods more
attractive to overseas buyers.

The minutes also showed all nine members thought the very weak short-term
outlook for inflation warranted keeping interest rates on hold at a record low
0.5 percent. Like last month, two members described their decision as finely
balanced,  however there was no repeat of another member’s view that a cut
in interest rates in the immediate future could be on the cards.
Explicit comments from the BoE about the outlook for the exchange rate are
rare, although Governor Mark Carney warned last week that the impact of rising
sterling on inflation could last for some time. 

USD
The Federal Reserve yesterday edged towards a much anticipated first rate hike
since 2006 by removing the word ‘patient’ from its language. However, the USD
did weaken as markets bet on a September rate hike rather June after it
downgraded the expected the pace of growth and inflation. In a statement
released from the meeting, the committee said it anticipates that it will start
to raise interest rates once it has seen further improvements in the labour
market and is reasonable confident that inflation will move back to its 2%
target over the medium term.

Key
Announcements
USD – 12:30 – Initial Jobless Claims expected to rise to 292k from 289k
USD – 12:30 – Continuing Jobless Claims expected to fall to 2.41M from 2.418M%

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