The British pound has posted losses in the Tuesday session. In the North American session, GBP/USD is trading at 1.3495, down 0.44% on the day. On the release front, UK employment numbers disappointed. Wage growth dropped to 2.6% in March, down from 2.8% a month earlier. This missed the estimate of 2.7%. Unemployment claims jumped to 31.2 thousand, well above the forecast of 13.3 thousand. The unemployment rate remained at 4.2%, matching the estimate. In the US, retail sales dipped to 0.3%, shy of the estimate of 0.4%. Core retail sales edged up to 0.3% but missed the forecast of 0.5%. On Wednesday, the US will release Housing Starts and Building Permits.
British employment numbers were a mixed bag on Tuesday. Unemployment claims and wage growth both missed their forecasts, but the unemployment rate remained steady, and the participation rate rose to 75.6%, the highest rate ever recorded. Policymakers at the Bank of England will have to digest the mixed job numbers, as the employment market and wage growth will be important factors in the bank’s thought process regarding rate future rate hikes. Weak economic numbers dissuaded the BoE from raising rates last week, but if second quarter data is stronger, the bank could press the rate trigger at its August meeting.
In the U.S, Retail sales reports were shy of the estimates in April, but investors preferred to focus on the positive, noting that both retail sales and core retail sales posted gains, as consumer spending is improving after a sluggish first quarter. A new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.
