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Sterling strengthens against euro with UK wage growth at two-year low


The pound sterling rose against the euro on Tuesday morning as UK wage growth hit a two-year low. Data from the Office for National Statistics showed that pay excluding bonuses grew at a rate of 5.4% year-on-year, the lowest in two years, while the unemployment rate fell to 4.2%. However, the number of vacancies in the UK decreased, causing uncertainty about the Bank of England’s next rate decision.

FX markets analyst Kyle Chapman said the mixed signals in the data make it unclear if the Bank of England will cut interest rates. The ONS report showed decelerating wage growth but better-than-expected unemployment rates, leading to speculation about the central bank’s future actions. Personal finance analyst Alice Haine noted that while households may benefit from increased wages, rising taxes could offset these gains.

Haine also mentioned that the Bank of England may hesitate to implement a second rate cut next month due to concerns about inflation. Despite the positive impact of the recent rate cut on borrowers, the central bank may wait for more data before making another move.

Overall, uncertainty remains about the future of interest rates in the UK as data on inflation and wages continues to fluctuate. Traders and policymakers will closely monitor upcoming reports for further clarity on the state of the economy.

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Photo credit www.euronews.com

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