The US jobs market has continued to cool, ING’s FX analyst Francesco Pesole notes.
EUR/GBP to break below 0.840 ahead of EU-UK trade talks
“There hasn’t been any sign of material deterioration after the April employer tax hike, and wage growth remains too high to make the Bank of England shift to a faster gear with monetary easing. In short, the UK labour market is slowing, not collapsing, and that is translating into a steady fall in wage growth.”
“The Bank of England will want to see this trend continuing for a few more months before it becomes more confident on the wage story. Until then, next week’s services inflation number will be much more consequential, given that April’s data is when the big annual price hikes kick in. We think this could come in a little below the Bank’s forecasts, which would help cement an August rate cut.”
“EUR/GBP has now approached 0.840, and we reiterate our call for a break lower ahead of EU-UK trade talks on Monday.”
