British Pound: Labour data seen backing BoE hold – TD Securities
TD Securities expects the UK labour market to remain soft but stable in June, with employment rising 100k on a three‑month basis and unemployment edging down to 4.7%. Headline average weekly earnings are forecast to slow to 4.0%, while ex‑bonus pay holds at 3.4%.
TD Securities anticipates a soft yet stable UK labour market in June, with employment increasing by 100,000 on a three-month basis and unemployment falling to 4.7%. Headline average weekly earnings are expected to decelerate to 4.0%, while ex-bonus pay maintains at 3.4%. TD Securities believes these wage trends should reassure the Bank of England, supporting the decision to keep the Bank Rate unchanged.
The labour market is projected to continue its sluggish but steady trajectory, with June recording a 100,000 change in employment on a three-month basis (market: 120,000; previous: 148,000). The unemployment rate is anticipated to decline slightly but remain high at 4.7% (market: 4.8%; previous: 4.9%). In terms of earnings, a significant drop in headline average weekly earnings growth to 4.0% 3m/y (market: 4.0%) from 4.3% in May is possible, as March's large bonus figures are excluded, reversing the upward pressure observed in the past three months.
Ex-bonus wage growth is expected to stay at 3.4% 3m/y (market: 3.4%), while private earnings ex-bonus growth is projected to decline to 2.7% 3m/y (market: 2.8%; previous: 2.9%). These indicators align with the Bank of England's inflation target, potentially reassuring the majority of the Monetary Policy Committee (MPC) that labour market dynamics are curbing second-round inflation pressures, supporting a majority vote to maintain the Bank Rate at its current level.
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