2023-07-11 11:39:04
The pound jumped against the dollar to its highest level in 15 months
The pound-dollar exchange rate rose to a 15-month high on Tuesday, supported by stronger-than-expected wage growth in the United Kingdom that boosts pressure on the Bank of England to continue raising interest rates.
The pound sterling rose against the US currency by 0.19% to $ 1.2885 on Tuesday morning, after jumping to $ 1.2899, the highest level since April 2022. The data released today, Tuesday, showed that the average annual total employee wages grew by 6.9% in the three months ending in May. .
The UK unemployment rate rose in the three months ending in May, but wage growth came in higher than expected, keeping pressure on the Bank of England to raise rates to counter inflation.
According to data from the Office for National Statistics, the unemployment rate rose to 4% in the three months ending in May from 3.8% recorded in the previous three months.
The average growth rate for employee wages, including bonuses, was 6.9% in the three months ending in May, when it was expected to grow by 6.8%. The bureau revised average weekly wages – excluding bonuses – up to 7.3% in the three months ending in April from 6.7%.
In the money market, strategists at the American investment bank Morgan Stanley said that the very bad sentiment regarding the British economy has made stocks and credit in the country now the cheapest in the world, which creates investment opportunities if inflation begins to slow.
“Investor pessimism towards the UK is currently high, however, sentiment could change if inflation begins to ease,” said analysts at the bank, led by Graham Secker, in a note released Monday.
And while British assets have offered relatively attractive valuations for some time, over the past 20 years, UK stocks and corporate bonds have been the cheapest global assets, according to the bank.
British stocks are the worst performers among major European and developed markets this year as high inflation prompted the Bank of England to continue raising interest rates.
British stocks are the worst performers among the major European and developed markets this year as high inflation prompted the Bank of England to continue tightening policy, adding to recession fears.
Traders have ramped up their bets that interest rates will rise to their highest level in 25 years, as they question officials’ ability to tame inflation without crippling the British economy.
Morgan Stanley analysts do not expect large UK companies to outperform their global peers in the next few months, due to weak earnings trends and outperforming growth stocks.
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