Published: Tue, April 17, 2018
Worldwide | By Gretchen Simon

Pound surges to highest level since European Union referendum

Pound surges to highest level since European Union referendum

"Employment rose again in the three months to February, to reach its highest ever rate since records began".

Markets had been looking for wage growth of 3% so the number comes as a disappointment for some although, despite this, it is still significant. Inflation over the period, as measured by the consumer price index, was around 2.9 percent. An ONS spokesman said bonus payments in February were lower than a year earlier but it was too soon to draw conclusions about the bonus season as a whole. "Markets are now pricing in an 85 percent chance of a rate rise".

Sterling's value has increased by more than 6% since the start of the year, and it is now "the darling of the currency world". Economists said the weaker-than-expected headline pay figure was unlikely to knock the Bank of England off course from raising interest rates next month for only the second time since the global financial crisis. This saw the Pound-to-Dollar rate quoted 0.04% lower at 1.4336, marking a reversal of an earlier 0.22% gain, while the Pound-to-Euro rate traded 0.11% lower at 1.1567.

There was also good news for wage growth, with wages growing at 2.8% over the period.

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The pound has climbed to its highest level against the dollar since the Brexit vote. The next reading is due on Wednesday 18, April.

However, recent rises in the pound can also be put down to fundamental data as economists anticipate an interest rate hike from the Bank of England (BoE), which has given clear signals that domestic inflationary pressures in the United Kingdom are building. "A three per cent wage growth print in today's United Kingdom jobs report should seal the deal for a May BoE hike".

At 1.1585, Sterling remains 13% lower against the Euro than it was on the morning of the Brexit referendum while the Pound-to-Dollar rate is only 1.1% below the 1.45 level it was at before the result became known.

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