Both the Dollar and Euro broadly treaded water today with markets seemingly ignoring slightly worse than expected US existing homes sales for December and a slightly better than expected German ZEW Economic Sentiment Index print for January.
Sterling was the outperformer today, gaining 0.7% in trade-weighted terms and GBP/USD making a bee-line for the 1.30 level. For once Brexit-related developments seemed to play second fiddle to macro data, with markets taking comfort from on-the-surface strong UK labour market data for November. The employment level rose for a third consecutive month – a punchy cumulative increase of 141,000 – to yet another record high of 32.53 million while the unemployment rate continued to inch down, to just 4.05%.
On the surface weekly wage data appeared to complete this strong picture, with nominal weekly wages (excluding bonuses) rising 3.4% yoy. But in real terms and including bonuses, wage growth was a far more modest 1% yoy. Compared to two years ago real weekly wages were up only 0.5% – despite UK GDP growth having averaged closer to 2%. The British economy is creating jobs but this is yet to translate into meaningful increases in real wages.
