FXStreet (Edinburgh) – Analyst at ING Bank James Knightley sees the case for the BoE to hike rates in February.
Key Quotes
“The UK jobs report is pretty close to expectations with some softish headlines. It is likely that the election timing has played its part given this are 3M rolling numbers so the uncertainty generated by the politics in April/May – whether it would be a Labour-SNP coalition government for example – led to firms being less keen to hire workers and invest aggressively”.
“We are expecting better numbers in coming months as the election effects fade and the underlying strength of the UK economy continues to push employment and pay higher”.
“If we look deeper into the tables at individual monthly data we see than the unemployment rate for June fell to 5.5% from 5.8% in May while private sector pay recorded the fourth consecutive annual increase in excess of 3% (public sector pay is being restrained by government spending limits to 1.3%YoY)”.
“Consequently, we expect medium term domestically generated inflation pressures to continue to rise, but in the near term CPI will remain depressed by falling energy prices and sterling strength. As a result we still favour a February date for the first Bank of England rate rise”.
(Market News Provided by FXstreet)