Wages rising for first time in a year


Following our historic vote to leave the European Union in June 2016, the pound took a tumble.

Sterling rose to $1.437 in early morning trading, surpassing a previous peak seen in January.

THE POUND has risen to the highest level against the dollar since the Brexit vote - in a huge vote of confidence for Britain as we enter trade talks within weeks. This saw the Pound-to-Dollar rate quoted 0.04% lower at 1.4336, marking a reversal of an earlier 0.22% gain, while the Pound-to-Euro rate traded 0.11% lower at 1.1567. "More interestingly, the pound is now also the best performing G10 currency versus the euro", says Derek Halpenny, European head of global markets research at MUFG. With unemployment at its lowest level since the 1970s, employers have begun raising pay for staff more quickly, though by less than increases of about 4 percent a year before the financial crisis.

The pound is also going strongly against the euro, reaching €1.1582, its highest level since May 2017.

But since the beginning of 2017 it has started to recover.

However, since the middle of last year, the pound has ripped higher, with the currency trading more than 15% above levels seen this time last year.

He said that renewed risk appetite and continued dollar weakness had helped to keep the pound strong despite weaker-than-expected economic data this month.

Hussein Sayed, the chief market strategist at FXTM, said in an email on Tuesday morning: "With more than 6% gains since the beginning of the year, the pound is now the best performing major currency".

Viraj Patel, a currency strategist with Dutch bank ING, labeled sterling the "darling of the currency world", in an analysis released at the end of last week.

"While most of this improvement has been due to a collapse in inflation - something that should be shown to have continued tomorrow - businesses are paying higher wages as the labour market in the United Kingdom tightens".

Inflation figures due Wednesday could shape views on whether the British economy can tolerate a second rate hike later this year, Rochester said. Solid numbers would likely push the pound even higher.