Sterling slips on slack wage growth [Video]

Today's Highlights

• Sterling slips on slack wage growth

• USD hit by tax reform problem

• South African Rand knocked by Zimbabwe changes

 

Current Market Overview

Sterling slipped to a four-week low against the Euro on Wednesday. Average wages growth still lags consumer inflation and that does nothing to alter the perception that the Bank of England will keep interest rates on hold for an extended period following their November rate hike; the first in a decade. Investors are also keeping a close eye on Brexit developments. Prime Minister Theresa May’s blueprint to leave the European Union emerged unscathed on Tuesday from a first day of debate in parliament on legislation to sever ties with the bloc. Sterling hasn’t collapsed though; levels around €1.11 and US$1.31 are reasonably stable and there is as much evidence to support a rise in Sterling’s value as there is to see it fall. Half decent Retail Sales figures today might steady the boat but the forecasts are pretty poor. Sterling may be in for a rough Thursday.

The US Dollar was on the defensive on Thursday, as doubts for the prospects of US tax reforms, a fall in US stocks, and declining high-yield bond prices all soured the mood. These overshadowed an uptick in underlying US inflation. The long-discussed US tax reform bill drew fire from two Republican lawmakers on Wednesday in a possible sign of trouble for the sweeping measure, given the party can afford to lose no more than two votes if they are to succeed in passing the legislation.

Elsewhere the upheaval in Zimbabwe is being seen as bad news for South Africa. Zimbabwe remains South Africa’s biggest trading partner so increased uncertainty and turmoil will negatively impact the South African economy and thus the Rand is at its weakest level against the Pound since September 2016. That’s a great buying opportunity for those who need Rand.

Data-wise, Australian employment figures were reasonably good this morning but have not really affected the GBP AUD Rate. Later this morning we have European Consumer inflation and Bank of England Governor, Mark Carney will also be speaking this afternoon.

And, as a monumental moment in history, you can’t beat what happened on this day in 1990. Having not sung or performed a note in their album, ‘Girl you know it’s true’, Milli Vanilli were stripped of their Grammy award. I know….it’s so sad. Still got their poster though.