UK100 Cautious as Wages Ease but Likely to Remain a Worry for the BoE
UK100 Analysis
Wage growth decelerated further according to today's data, as total pay in the UK rose by 5.8% in the October-December period, marking the slowest pace in more than a year. The figures though were above estimates and continue to be historically high. Although the moderation will be cheered by Bank of England, pay growth will likely remain a concern and continue to make the task of bringing inflation down harder.
The Consumer Price Index (CPI) has eased substantially over the past several months. However, the last reading showed an uptick and inflation is far from 2%, a target which the BoE does not expect to hit before the end of 2025. Policymakers pointed to peak rates earlier in the month, but stressed the need of sustained restrictive stance and did not embrace cuts. [1]
UK100 faces pressure today as wages will likely continue to worry the central bank and as markets brace for Wednesday's CPI update that will impact its policy path and the trajectory of the index. Below the EMA200, bias is on the downside, creating risk for new 2023 lows (7,423).
On the other hand, Governor Bailey had not opposed market pricing for 4-5 cuts this year, during a post-decision interview on CNBC [2]. Prospects of a pivot can support UK100, but will need help from the data to react and push towards 7,795.
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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