Pound’s Rally against the Euro Ends on Weaker Wage Growth

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Pound’s Rally against the Euro Ends on Weaker Wage GrowthThe sterling ended its winning streak against the euro that saw it touch a 16-month high as weekly wages in the first quarter grew slowly than analysts had expected.

The pound declined 0.2 percent to 81.60 pence a euro in late morning trade in London, after earlier surging to 81.27 pence, the most since January 7, 2013. The UK currency remained slightly unchanged at $1.6817 after earlier surging to $1.6996, a peak last climbed in August 2009.

“Sterling hasn’t liked the data,” Peter Kinsella, a London-based senior foreign-exchange strategist at Commerzbank AG told Bloomberg. “The earnings data was disappointing. It could give the Bank of England the excuse they need to hold rates for longer than people thought necessary.”

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Wages inclusive of bonuses grew 1.7 percent in the first three months of the year. Minus bonuses, the wages rose 1.3 percent, reported the Office for National Statistics. This was less than the median growth rates of 2.1 percent and 1.5 percent respectively in Bloomberg surveys of economists. Unemployment claims declined 25,100 last month, which was less than 30,000 that analysts had expected.

The unemployment rate, as measured using International Labour Organization standards, declined to 6.8 percent from 6.9 percent in the quarter ending February.

So far, the pound has advanced 0.6 percent in the last one month, making it the third-best performing currency of the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The pound has accelerated in the past month as analysts speculated strong economic growth may prompt the Bank of England to increase interest rates. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com