In a trading day starting with general USD strength across the board, the pound is holding up well, helped by some good jobs data released this morning. As economists at ING note, good UK jobs data is also supporting hawkish Bank of England (BoE) bets.
Data doing little to challenge hawkish BoE bets
“After showing resilience to the end of the furlough scheme, the UK labour market continued to tighten in November, with the unemployment rate moving a notch lower, to 4.1%. Wage growth decelerated, but not more than consensus and remained above 4.2%.”
“We think that the BoE’s rate expectations (four hikes by the end of 2022) are overdone, but this morning’s jobs data as well as tomorrow’s CPI data are set to do little to challenge the current hawkish bets. Ultimately, this means that the pound’s good momentum, which has remained immune to the UK’s political noise – should remain broadly intact into the 3 February BoE meeting.”
“EUR/GBP remains on track for a move below 0.8300.”