It continues to be an uneventful week for the British pound. In Thursday’s North American session, GBP/USD is trading at 1.3505, up 0.12% on the day. On the release front, there are no British indicators on the schedule. In the U.S, major indicators were a mix. Unemployment claims climbed to 222 thousand, above the estimate of 216 thousand. This was the highest reading in 4 weeks. There was much better news on the manufacturing front, as Philly Fed Manufacturing Index jumped t0 34.4, crushing the estimate of 21.1 points. This was the strongest gain since February 2017.
All eyes were on British job numbers on Tuesday, and the readings were lukewarm. Wage growth dropped from 2.8% t0 2.6% in March, missing the estimate of 2.7%. Unemployment claims increased by 34.4 thousand, much higher than the estimate of 21.1 thousand. This marked a 12-month high. At the same time, the labor participation rate rose to 75.6%, the highest rate ever recorded. Policymakers at the Bank of England will have to decide what to make of the mixed readings, 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 and core retail sales posted gains in April, although both indicators fell short of the estimates. Still, consumer spending is improving after a sluggish first quarter. Investors liked what they saw, and the US dollar was broadly higher on Tuesday. At the same time, 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.
