UK100 Cautious as Wages Ease but Likely to Remain a Worry for the BoE

  • UK100
    (${instrument.percentChange}%)

UK100 Analysis

Wage growth decelerated further according to today's data, as total pay in the UK rose by 5.8% in the October-December period, marking the slowest pace in more than a year. The figures though were above estimates and continue to be historically high. Although the moderation will be cheered by Bank of England, pay growth will likely remain a concern and continue to make the task of bringing inflation down harder.

The Consumer Price Index (CPI) has eased substantially over the past several months. However, the last reading showed an uptick and inflation is far from 2%, a target which the BoE does not expect to hit before the end of 2025. Policymakers pointed to peak rates earlier in the month, but stressed the need of sustained restrictive stance and did not embrace cuts. [1]

UK100 faces pressure today as wages will likely continue to worry the central bank and as markets brace for Wednesday's CPI update that will impact its policy path and the trajectory of the index. Below the EMA200, bias is on the downside, creating risk for new 2023 lows (7,423).

On the other hand, Governor Bailey had not opposed market pricing for 4-5 cuts this year, during a post-decision interview on CNBC [2]. Prospects of a pivot can support UK100, but will need help from the data to react and push towards 7,795.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 13 Feb 2024 https://www.bankofengland.co.uk/monetary-policy-report/2024/february-2024

2

Retrieved 16 Apr 2024 https://www.cnbc.com/video/2024/02/01/watch-cnbcas-full-interview-with-the-bank-of-englandas-andrew-bailey.html

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.