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GBP: Focus on Broadbent speech on UK labour market - MUFG

FXStreet (Delhi) – Derek Halpenny, Research Analyst at MUFG, notes that today’s speech by Ben Broadbent on the labour market may prove crucial as in early August he described the economic recovery as “well-embedded” but was mindful of international developments.

Key Quotes

“Since the minutes of the September MPC meeting were released which showed an 8-1 vote in favour of unchanged monetary policy we have had the release of the key jobs report for July/August, which we believe offered strong evidence that the UK labour market may be tightening more quickly than the MPC is currently acknowledging.”

“But given this speech is on the labour market specifically he will be hard pressed not to highlight the very positive developments of late. In particular the fact that wages are accelerating notably.”

“The 6-month annualised rate of increase in weekly earnings hit 3.5% in the July data and was the highest since July 2008. The 3mth average weekly earnings annual growth rate jumped from 2.6% to 2.9% but the one-month increase was from 2.3% to 3.7%.”

“There is certainly scope today for Broadbent to shift the rhetoric on tightening labour markets and subtly hint that the current expectations of rate increases look too cautious. We continue to see value in the pound at current levels.”

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