- After rallying yesterday, GBPUSD starts the day softer as data released this morning showed that UK wage growth slipped in the three months to August, boosting the odds of an interest rate pause from the BoE. Average earnings excluding bonuses rose 7.8% from a year earlier, down from an upwardly revised 7.9% in July, the fastest recorded since the series began in 2001. Growth in private sector pay also eased, suggesting that the string of 14 consecutive interest rate hikes from the MPC since the end of 2021 is having an impact. The print comes 24 hours before the important CPI inflation print for September and helped push cable down from 1.2220 to 1.2175 ahead of support at 1.2135. The pair is likely to trade with a slight downward bias ahead of tomorrow’s inflation report, with resistance not seen until 1.2230.
- The US dollar remains steady with the dollar index trading at session lows, as treasury yields ticked a little higher. The small slip in the greenback also came after Philly Fed President Patrick Hunter said that the central bank shouldn’t be thinking about additional interest rate increases with so many small US businesses struggling to cope with its tightening cycle to date. Hunter is one of the Fed’s biggest doves, suggesting that rates should be held steady as they should already be sufficiently high to quell inflation.
- EURUSD continues to trade sideways bouncing off support around 1.05 and initially capped at 1.0560. Overnight, ECB Chief Economist Philip Lane said that policymakers must stand ready to take further action if additional shocks to inflation emerge.