🇬🇧Cable FX Macro Weekly Note: U.K. Labour Report

**As seen in Risk In The Week report 07/09/23, subscribe at cablefxm.co.uk/reports

U.K. May claimant count change fell by 13.6K, this followed a downward revision of 23.4K, this left the 3-month rolling average at 12.1K. April unemployment rate surprised to the downside after falling to 3.8% from the prior 3.9%, consensus had seen a 4.0%, the March jobless rate was the highest since January 2022. If this was not enough to catch the BoE’s attention, average weekly earnings accelerated to 6.5%, this was higher than the consensus of 6.1% and the prior 5.8%. Both earnings and a tight labour market will keep the central bank in check, overnight index swaps now price an additional 140 basis points of tightening by year-end. Economists at Scotiabank said the strength in wages is likely to continue into May while total employment has now fully recovered from the pandemic, they warned that such strong labour market will maintain the BoE in hiking mode. The desk at MUFG penciled softer growth and inflation emerging later this year, they noted that yields are overshooting to the upside on a BoE hawkish repricing and if their projection materializes, they would expect a correction in both yields and sterling.