Economic headwinds continue to plague the UK alongside the ongoing uncertainty on the impending EU membership referendum, known as “Brexit”, due in June. Data released by the UK’s Office for National Statistics (ONS) earlier today showed that the average earnings index excluding bonuses grew at a pace of 1.80% in the three months ending February, slower than the previous print of 2.10%. However, including bonuses, the average weekly earnings increased 2.20%, rising as the same pace as in January. The unemployment rate remained steady at 5.10% in the three months ending February but jobless claims in March increased 6.7k with the previous month being revised to -9.3k from -18k initial estimates.
The Bank of England in its April monetary policy report noted that the central bank expects employment growth in the UK to slow down, following a strong recovery into January this year. The central bank noted that employment growth declined from its peak, even though the unemployment rate approached its pre-crisis levels. The meeting minutes highlighted that hiring in the UK had slowed down considerably hinting that it might have to do with the upcoming EU membership referendum with many businesses holding off on hiring until the results become clear.
Yesterday, Bank of England governor Mark Carney testified before UK lawmakers, speaking on a range of issues. Most notably, the BoE defended its stand on issuing a warning on the risks of the UK leaving the EU, saying that the bank was "duty bound" to do so. GBPUSD has been steadily climbing for the past three days after forming a low at $1.4089 on April 14th. The pound closed yesterday at $1.4396, posting a 12-day high.
UK Labor Market Slowing
Market Trends - 20/04/2016