UK wage growth still looking good
This morning's UK employment report was always going to be viewed amid the backdrop of the latest Brexit developments, though looking at wage growth, the numbers are still looking good and continues to fly in the face of the uncertainty. Average earnings including bonuses are now growing at an annualised rate of 4.0%, up from an upwardly revised 3.8% in June. July earnings excluding bonuses rose by 3.8% as expected, and although this was down from 3.9%, still represents a healthy growth rate.
The 3 month on 3 month change in employment was the only miss in the report, though we still saw a 31k net gain, where expectations were closer to the 50-55k area. This was also down from 115k previously. However, the unemployment rate is still slower, edging down from 3.9% to 3.8%, with the claimant count in August also lower than expected at 28.2k vs 29.3k forecast.
Once again, we cannot expect too much reaction from GBP, where the upside seems to have exhausted itself for now. With parliament now in recess, the markets will be awaiting fresh news from the negotiations, but as we have heard from the Irish contingent, there is still little in the way of fresh alternatives to replace the backstop on the Irish border.
Cable attempted a push towards 1.2400 early on, but sellers have managed to contain the move. On the downside, pre 1.2300 buying has set the near term limit on the downside, so we now have our immediate range for the day, or until fresh developments are forthcoming.
Support in EUR/GBP at 0.8920 seems to have contained the downside this morning, despite this being taken out on Monday. Gaining traction on the upside is going to be a tough ask ahead of the ECB meeting on Thursday, so we can expect some tight price action here over coming sessions.