Sterling ticks higher before United Kingdom wages data

Sterling ticks higher before United Kingdom wages data

Sterling ticks higher before United Kingdom wages data

May's botched election gamble has left her so weakened that her Brexit strategy is the subject of public debate inside her party, with two former prime ministers calling on her to soften her European Union exit approach.

That's bad news for businesses here selling into the United Kingdom market.

"This spike in inflation will exert further downward pressure on real household disposable income, at a time when wage growth remains modest, and in turn squeeze consumer spending".

The Bank of England (BoE) has highlighted stubbornly low wage growth since the 2008 financial crisis as one reason for keeping United Kingdom interest rates low.

Sterling dipped back under 88 pence against the euro yesterday.

Inflation hit an nearly four-year high of 2.9 percent in May, fueled by the fall in the pound since last year's Brexit vote and adding to the strain on household budgets, according to data published on Tuesday.

The Office for National Statistics said Tuesday that consumer prices were up 2.9 percent on the year in May, from 2.7 percent in April.

British workers' earnings after inflation are shrinking at the fastest pace since 2014, underscoring the economic challenge facing a weakened Prime Minister Theresa May as the squeeze on consumers tightens faster than expected, data showed.

Standards of living continue falling in the United Kingdom: wages are up only 2.1% in April, down from a downwards revised 2.3%.

Brexit has already had an impact, as goods exports plummeted by nearly half a billion euro past year, on the back of the Brexit-induced weakness in the pound. Moreover, ongoing political uncertainty is consuming precious negotiating time with the EU.

Mr Kolodseike said that while the pound did recover slightly on the back of the inflation data, it could see-saw over the short term until a new United Kingdom government is formed.

"Although inflation has surprised the BOE on the upside, we expect the MPC to look through this temporary spike in inflation and hold monetary policy stable until mid-2019", said Kara.

For the 24 hours to 23:00 GMT, the GBP rose 0.66% against the Dollars and closed at 1.2752, after recent data indicated a more-than-expected rise in UK's inflation.

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