Skip to content GBPUSD Fundamental Analysis – 13-September-2024
The British pound stayed close to $1.313 (GBP/USD) as traders took their time to understand the latest economic figures and what they meant for future interest rates. Despite expectations, the UK’s economy didn’t grow in July, remaining flat for the second month.
Experts had predicted a slight growth of 0.2%, but the economy showed no change. In addition, industrial production dropped by 0.8%, a figure that caught many off guard.
Wage Growth Slows, Raising Concerns
Another important point is that wage growth has been slowing down. Overall wage growth fell to 5.1%, the weakest it has been in about two years.
Private sector wage growth, a key focus for the Bank of England, also dropped to 4.9%, marking its lowest since 2022. This slowdown in wage growth could affect how much people spend, which might slow the economy further.
Unemployment Rate and Job Growth Offer a Silver Lining
On a brighter note, the unemployment rate in the UK fell slightly to 4.1%. At the same time, the economy added 265,000 jobs, which was significantly more than what experts had expected.
This increase in jobs is a positive sign, even though other areas of the economy show weakness.
Bank of England’s Approach to Interest Rates
The Bank of England already reduced interest rates in August. However, they are moving slowly and cautiously when making further cuts. Many investors believe the Bank will lower borrowing costs again in November, with a chance of yet another reduction in December.
These potential rate cuts are closely watched, as they could significantly impact the pound and the UK economy.
Conclusion
To sum it up, the British economy is showing a mixed picture. While job growth and a falling unemployment rate offer some positives, a slowdown in wage growth and industrial production raise concerns.
The Bank of England’s careful approach to interest rate cuts will be important in determining the economy’s next steps, and traders are keeping a close eye on how this will affect the British pound in the coming months.
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