Flash: Lower for longer in the UK too - Investec

FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, observed that a gradual adjustment in UK wages would imply lower rates to stay for longer.

Key Quotes

"The unexpected first rise in UK unemployment yesterday for 10 months, edging up from 7.1% to 7.2%, lead to a dip in GBPUSD to make new lows for the week under 1.6650. It is worth remembering that UK unemployment has fallen much sharper than was expected in the last few months and even this rise still has the UK employment data far ahead of where expectations were previously."

"The UK’s recent run of strong employment market data has raised the prospect that wages may be set for a significant increase, although our own economist Philip Shaw feels such speculation may be premature as wage growth is only just moving back towards normal levels after a long period of downwards pressure".

"Salary growth has a lot further to rise to be back in line with longer term trends and with the unexpected rise in unemployment yesterday the Bank of England will feel comfortable with their stance that rate rises are still some way off."