UK Labour Market Cools

Sterling faces downbeat pressure

Sterling drops to the support level of $1.2800 (GBP/USD) in this mornings session as the Office for National Statistics (ONS) has reported soft employment data. Figures showed that the higher interest rates from the Bank of England and the deepening cost-of-living crisis are starting to dampen the labour market conditions. The UK's unemployment rate increased to 3.9%, employers fired 21k workers, and average earnings grew at a slower pace in the three months up to January. Evidently, this data demonstrates uncertainty over the economic outlook, which could force BoE policymakers to look to reduce interest rates earlier than expected.?

Data :

0700: Claimant Count Change : 16.8K?

0700: Average Earnings Index 3m/y

EUR: MRR discussion leans on the dovish side

Media reports yesterday suggested that the European Central Bank is leaning towards keeping the minimum reserve requirements at 1%, defying expectations that they would be hiked to 2% at tomorrow's announcement. The move has been supported by the hawkish front of the bank, and whilst this doesn't have any clear short-term implications for the FX market, the decision to keep MRR unchanged may have repercussions on the consensus for monetary policy decisions.

No Major Data

USD: Core CPI at 0.3% could provide support

The Dollar starts today in a slightly better shape than last week, having reversed a small portion of last week's losses versus other G10 currencies. This was due to some cooling-off in risk sentiment ahead of the pivotal February inflation numbers released today, which are expected to show a flattening in headline inflation at 3.1% year-on-year. Most notably, a deceleration in the core rate from 0.4% to 0.3% month-on-month and from 3.9% to 3.7% YoY.

Data: 12.30: Core CPI m/m, CPI m/m, CPI y/y