- Data released this morning showed that wage growth in the UK accelerated more than forecast in the three months to October as private sector pay strengthened. Average earnings growth excluding bonuses rose 5.2% from a year earlier, up from the previous reading of 4.8% and above consensus of 5%. Private sector growth increased to 5.4% from 4.9%, above expectations and higher than the Bank of England’s forecast of 5.1%. The tick higher in wages growth comes just a day ahead of key CPI inflation data and Thursday’s BoE policy meeting and underscores the central bank’s caution about cutting interest rates. The MPC has cut interest rates twice this year and is widely expected to keep rates unchanged at 4.75% when they announce their decision at midday on Thursday.
- The dollar index is consolidating as markets remain calm in the final full week of the year as we await the Fed announcement tomorrow. The single currency is range trading ahead of today’s German IFO survey, which is unlikely to shift EURUSD outside of its recent range. US Retail Sales are on the docket this afternoon and are expected to grow slightly, driven by higher vehicle sales. Spending is expected to have received a boost from discounted around the Thanksgiving and Christmas period. This afternoon’s data is unlikely to impact markets or tomorrow’s Fed decision with most economists expecting a 25bp cut from the FOMC.
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