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Sterling higher after record growth in UK wage packets

Huge morning ahead with UK inflation & EU GDP numbers..

The Pound is trading at a 1-week high against the majority of currencies after momentum in wage growth continues in the UK. Annual wage growth for June when both including and excluding bonuses have reached new records. Wages are a key driver in the current UK inflation rate and with the numbers still too strong, it will be a risk for the BoE to stop raising interest rates.

This is why Sterling has risen today and recovered almost 1-cent versus the Euro. Tomorrow is the main data release of the week with the UK producing the key market mover in inflation news. Consensus is for a steep drop in the inflation rate with a tick lower in the more important core figure. 

If this arrives, we are likely to see £ weakness. But, if it goes the other way GBP will continue to rise. The end of the week looks set to be misery for the UK in terms of the latest retail sales number and so we may see the Pound end poorly regardless of the result tomorrow.

The Euro is banking on a positive GDP number tomorrow to turn its recent fortunes around. The single currency has been out of favour in recent months with the ECB's decision to halt their aggressive interest rate hiking path not helping matters. The result tomorrow will be similar to that of the Pound's after the inflation figure. If GDP is higher than forecast, the € will gain and if it falls below it will lose value. 

There is no change to the 'King' Dollar at the moment as it seems primed to gain value across the board. £-$ has been trading below the psychological barrier of 1.30 mid-market for a month now and the € has seen it lose nearly 3% in the last month. Things look set to continue this week for a strong USD.