The British Pound (GBP) was the only currency that held up reasonably well against the US dollar on Tuesday. The economists of Commerzbank analyze the prospects for the pound sterling.
Good report on UK employment
The UK Office for National Statistics (ONS) reported on employment. 48,000 jobs added instead of 18,000 lost, a low unemployment rate and, last but not least, higher income growth: nothing was missing from the overall positive GBP picture.
Underlying data (especially wage growth) leave little room for interest rate cuts, and the encouraging employment situation makes prolonged tight monetary policy generally acceptable. Ultimately, however, what matters is whether the market expects a central bank to overcompensate for a positive inflationary surprise, that is, to revise its interest rate expectations more than its inflation expectations.
This is usually the case. Tuesday was no exception. It's not surprising, especially now. After all, it is especially difficult at the moment to assess the political reaction functions of central banks. This assessment is therefore variable and subject to particularly large fluctuations in the event of surprising data publications. Therefore, It is understandable that the Pound has risen, but here too a warning is in order: The new strength remains fragile.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
