British Pound: Drop in Wage Growth Sends Currency Tumbling

Weaker economic data sent the British pound tumbling against the US dollar today.

Despite the fact that jobless claims dropped more than expected and the percentage of people claiming unemployment decreased, the sharp fall in average earnings triggered a major sell-off in the British pound. Softer wage pressures reflected poorly on overall inflationary pressures. This comes as a surprise given the hawkish comments from BoE Governor King Monday night. Losses should be limited however as the central bank is still on track to raise interest rates this year. UK retail sales are due for release tonight. We are looking for softer numbers given weakness in department store sales.