Pound hits 5-week high after jobs data

There’s been more gains seen in the pound this morning as the currency looks to build on a bright start to the week after rising yesterday on some upbeat Brexit comments. The cause of the latest gains is the release of the most recent jobs figures which have shown the unemployment rate in July remained close to its lowest levels since the early 1970s at 4.0%. While the unemployment rate attracts the headlines the more important data for traders is the average earnings number which increased more than expected to 2.9% in annualised terms if bonuses are stripped out. This marks 5 consecutive months of real wage growth, where wages have grown faster than inflation.

The pound is now looking to firm up back above the $1.30 handle and currently trades close to a 5-week high. Today’s data is in keeping with the recent theme of pretty solid releases and while the Bank of England are almost certainly set to stand pat and leaves rates unchanged this Thursday there remains plenty to suggest further tightening going forward as long as there’s not a large adverse Brexit-related shock.

On that front the rhetoric from the continent has improved markedly in recent weeks with several comments suggesting a willingness to reach a deal that was hitherto absent. The markets have grown increasingly sensitive to these remarks and the risks appear at present to be skewed to the upside as far as Brexit developments are concerned for the pound with a notably greater propensity to rally on positive news than to fall on negative stories.