| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 07:00 | Germany | CPI, m/m | February | 0.2% | 0.4% | 0.4% |
| 07:00 | Germany | CPI, y/y | February | 2.9% | 2.5% | 2.5% |
| 07:00 | United Kingdom | Average Earnings, 3m/y | January | 5.8% | 5.7% | 5.6% |
| 07:00 | United Kingdom | Average earnings ex bonuses, 3 m/y | January | 6.2% | 6.2% | 6.1% |
| 07:00 | United Kingdom | ILO Unemployment Rate | January | 3.8% | 3.8% | 3.9% |
| 07:00 | United Kingdom | Claimant count | February | 3.1 | 20.3 | 16.8 |
GBP fell against most of the other major currencies in the European session on Tuesday as investors heightened their bets on interest rate cuts by the Bank of England this year in response to the data from the UK, which indicated the country’s labour market is cooling.
The Office for National Statistics (ONS) reported earlier today that the number of people in work in Britain declined by 21,000 in the three months through January 2024, following a 72,000 gain in the three months through December 2023. This was the first fall in job creation since September 2023. Economists had predicted an increase of 10,000. Meanwhile, the UK’s unemployment rate inched up to 3.9% from 3.8% in the previous three-month period. This marked the first rise in the rate since July 2023 and surprised economists, who had expected the rate to remain unchanged.
However, the most remarkable point of the report was the wage growth data. Average weekly earnings including bonuses surged by 5.6% YoY in the three months in the three months through January, easing from 5.8% YoY in the previous period. This represented the weakest rise since July 2022 and was marginally below economists’ forecast of 5.7% YoY. Excluding bonuses, average weekly earnings soared by 6.1% YoY, the least since October 2022.
Adding to signs of softening conditions in the British labour market, a separate report from the ONS showed the number of vacancies fell by 43,000 in the period from December 2023 to February 2024 to 908,000, the lowest level since 2021.
Today’s data were interpreted by markets as favourable from the BoE’s perspective and prompted a reassessment of rate cut expectations. According to Bloomberg, markets are now again fully pricing in three 25-basis-point rate decreases this year. Before the data, markets were seeing about 70 basis points of cuts for 2024.