UK unemployment hits 48 year low- wage growth still outstripped by inflation.

UK unemployment this morning decreased to a 48 year low of 3.6% with average earnings up 5.5%. when taking the rise in prices into account the value of regular pay fell by 2.8% the ONS report. UK CPI inflation data is due to be released tomorrow and is forecast to remain above 10%.

The euro has been buoyed by bullish comments following the ECB’s 0.75% rate hike last week. On Thursday the ECB stated: ‘This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to the ECB’s 2% medium-term target. Over the next several meetings the Governing Council expects to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.’

A further 75basis point hike in October has not been ruled out, this would be euro positive.

Both the MPC and FOMC meet next week on Wednesday and Thursday respectively (the MPC’s meeting postponed from this Thursday), both are expected to hike by 0.75%. The market is pricing in an 88% probability of the FOMC’s hike.

Deutsche bank has issued a warning for the UK economy. The bank are warning that the UK economy could well slip into a technical recession, the chances of which will only rise as bank holidays are added for Her Majesty’s Funeral and the Coronation of King Charles III.

At a time when energy supplies are strained French energy supplier Electricité de Strasbourg sold in error ‘colossal quantities of electricity’ losing the EDF subsidiary company €60m.

The sale caused an alert to go be sent to neighbouring nations including the UK and Spain for assistance with French electricity needs.

Economic Calendar

07:00EUR German Final CPI m/m0.3%0.3%
07:00GBP Average Earnings Index 3m/y5.4%5.2%
07:00GBP Claimant Count Change-13.2K-14.5K
07:00GBP Unemployment Rate3.8%3.8%
13:30USD CPI m/m-0.1%0.0%
13:30USD Core CPI m/m0.3%0.3%
19:00USD Federal Budget Balance-215.0B-211.1B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.