After a week of struggling to stay above water, the Pound (GBP) slid into a lower position following weak data findings in the UK Job report. As a result, the Bank of England (BoE) pulled back harshly on interest rate hikes, leaving the economy in a tumultuous standing.
Sterling slumps after job report weakens UK market
The Job report detailed a record 2-year rise in unemployment alongside a fall in job vacancies, the worst witnessed since July 2021. It appears that the waves of fluctuation for the UK economy and GBP are set to continue shrinking the economy; in July this year, the economy shrank 0.5%, far worse than the predicted 0.2% shrinkage.
The data, published by the Office for National Statistics, also outlined a slight positive in its findings – average earnings rose to 8.5% from May to July. This increase, although minor, works to prove the BoE’s interest rate hikes are potentially encouraging more spending on commercial necessities.
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Janet Mui Source: LinkedIn
However, analysts still predict further interest hikes for September and October. Janet Mui, Head of Market Analysis at wealth manager RBC Brewin Dolphin, commented:
The problem, and a big headache, for the Bank of England at this juncture is that wage growth remains very elevated, and that is a factor that the BoE judges to drive sticky core inflation. With that in mind, today’s wage growth figure lends support to the hawks for a 25-basis point rate increase in September.
The European Central Bank is also set to decide on further interest rate hikes, with the UK market weighing heavily on investor movement.
