Pound Traders’ Focus Switches to Jobs Data After BOE Flurry

After the novelty of “Super Thursday,” next week is all about Wednesday for pound traders.

That’s when the U.K. releases its latest jobs and wage data, which investors will scour for signs of strength that could accelerate the Bank of England’s plans for an interest-rate increase. The pound declined versus most of its 16 major peers this week as a slew of BOE data on Aug. 6 showed fewer policy makers than economists forecast voted to raise rates this month and Governor Mark Carney said the timing of such a move will be data-dependent.

Wages growth is “a key pinch point for the rate debate at the BOE,” said Daragh Maher, a currency strategist at HSBC Holdings Plc in London. “Punchier wage data would clearly be helpful. I’m currently a seller of euro-sterling, but was hoping for rather more impetus for that trade from the BOE events just gone.”

The pound dropped 1 percent this week to $1.5468 as of 5 p.m. London time Friday, the steepest decline since July 3. Sterling depreciated 0.8 percent in the week to 70.86 pence per euro.

Regular earnings rose an annualized 2.8 percent in the three months through June, unchanged from the previous period, the Office for National Statistics will say Aug. 12, according to the median forecast of analysts in a Bloomberg survey. A separate report is forecast to show the U.K. unemployment rate held at 5.6 percent.

Super Thursday,” as dubbed by economists, saw BOE officials publish their policy decision, the vote, minutes of the meeting and their quarterly Inflation Report simultaneously on Aug. 6.

Lone Dissenter

While the forecasts in the report projected consumer-price growth above the central bank’s target in three years, the pound dropped after the minutes showed only one Monetary Policy Committee member voted to raise the benchmark interest rate. Most economists expected that at least one more would push for tightening.

Even so, forward contracts based on the sterling overnight index average, or Sonia, show traders predict rates will rise in May. That’s three months earlier than what was implied as recently as July 10.

U.K. government bonds rose for a fourth week, the longest run of gains since January. The benchmark 10-year gilt yield fell three basis points, or 0.03 percentage point, to 1.85 percent. The 5 percent bond due in March 2025 climbed 0.29, or 2.90 pounds per 1,000-pound face amount, to 127.545.

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