The UK's average earnings index 3m/y (including bonuses) printed at 8.2%. This is higher than the previous 7.2% and higher than the forecast of 7.3%. In fact, regular pay grew by 7.8%, which is the highest rate since records began in 2001. This suggests another rate hike by the BoE in September is a distinct possibility.
In this regard, the 2-year gilt has bumped up nearly 9 basis points (red arrow) today. Moreover, the short-term yield has charted a higher trough followed by a higher peak and is in uptrend.
Nevertheless, GBPUSD is still defined by the green downtrend line and is yet to turn up with the 2-year. However, there is underlying support near the 1.2620 level, which may act as a platform for a higher cable pair.
For timing purposes, a golden cross of GBPUSD's EMAs will be constructive in signalling that the pair is starting to move in line with the 2-year yield.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.