The UK unemployment rate for June remained steady at 4.7% today with employment increasing more than expected and far higher than May. This has prompted Sterling to increase in value across the board.
The more important 'average earnings' figure remains sticky, but is still easing slowly MoM. Jobs overall remain 'soft', but a significant deterioration has yet to be realised. The news today has seen UK bond yields lower, no increased chance of interest rate cuts and therefore £ has improved.
In 1998, The Bank of England (BoE) was made independent by Chancellor Gordon Brown (Labour). Since this time, both Labour & Conservative governments have avoided any commentary on BoE monetary policy. Until now..
There is plenty of evidence (through social media posts in particular) to suggest Labour are trying to convince the public that government and the central bank are aligned.
This is a big 'no-no' move as far as investors are concerned.
Investors are trustful of institutions who operate for the long term (investing is a long game business after all), not short-term like politics is with its 4-year cycle.
One of the big reasons for USD devaluation this year has been President Trump's public 'assassination' of Fed Chair Powell's interest rate decisions as he tries to influence what the independent Federal Reserve does.
An independent central bank sometimes has to make unpopular decisions.
They are in place to control inflation at their core and monitor for the long-term. If there is no independent controller of inflation (due to being politically motivated) businesses will raise prices, workers will push for more wages and inflation will go red.
Thursday's GDP release a big one for £-€, although no surprises are expected from either side. The main event comes later today with the US inflation rate with analysts suggesting this could be the first 'tariff infused' reading.
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