UK Wages Fall Back
The latest data from the ONS today showed that UK wages softened in the three months through January. Basic wages, excluding bonuses, rose by 6.5%, down from 6.7% prior while total annual pay rose by 5.7%, down from 6% prior. The data is a further encouraging sign that inflation has likely peaked in the UK and is strengthening the view that the BOE might soon pivot on rates, potentially as early as the next meeting.
BOE in Focus
Expectations for the next BOE meeting had been pegged around a lower .25% hike on the back of recent BOE comments regarding inflation. However, in light of the fallout around the SVB collapse and fears for the health of the global banking sector, traders are now starting to price in a rate pause from the bank. Those calling for the BOE to push ahead with further hikes, however, point to the unemployment rate holding at lows of 3.7% while recent GDP data has come in better than expected.
Market Pricing
Looking at the latest market pricing, odds for a .25% hike are currently sitting around 60% while odds for a pause are around 40%. With the meeting pegged for next Thursday, the developments within global stock markets ahead of the meeting will no doubt be a deciding factor for the bank. If contagion fears continue to drive instability in stock prices the BOE might well look to hold off on a further hike at this point.
Technical Views
GBPCAD
The pair is currently testing the long term bearish trend line and recent structural highs around the 1.6698 mark. With retail heavily short and momentum studies bearish, the focus is on a further push higher and a break of current YTD highs targeting 1.6976 initially.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.