The UK unemployment rate stayed at 4.3% in September, keeping the measure at its lowest level since 1975.
This hasn’t translated to a Pound rally, however, with the GBP INR exchange rate remaining range bound.
While the unemployment data has been positive, UK earnings stats have been more disappointing. Average wage growth without bonuses has slowed to 2.1%; while growth in earnings including bonuses has held at 2.2%.
Regardless, the pace of earnings growth remains below the level of inflation, which was confirmed on Tuesday at 3%.
This means that UK consumers remain in the grips of a wage squeeze, which the Resolution Foundation thinks will worsen before Christmas.
Can UK Government Boost Pound (GBP) by Solving ‘Productivity Puzzle’?
Economists have been quick to respond to the news that UK unemployment is down but wages are failing to grow.
Looking at the situation has been Stephen Clarke, Economic Analyst at the Resolution Foundation;
‘The scale of the pay squeeze over the last decade is so vast that people today are earning no more than they did back in February 2006, despite the economy being 4.4% bigger per person since then’.
Suggesting a way out of this problem was Matthew Percival, Confederation of British Industry (CBI) Head of Employment;
‘Persistently weak productivity, coupled with falling real wages, continues to hit living standards, underlining the need for the Chancellor to be bold in his budget.
Delivering urgent progress on large and small infrastructure projects, addressing underfunding…and providing practical support…are all steps the Government can take to boost productivity, the only sustainable route to improving people’s pay’.
Indian Rupee (INR) Trades Higher as Annual Inflation Cools
Like the Pound, the Indian Rupee has recently been affected by inflation figures.
In India’s case, year-on-year inflation has slowed in September, a cause for optimism among Rupee traders.
Expectations are that this slowdown in price growth will trigger a surge in factory output and national exports, which could result in a higher-than-expected GDP reading in the weeks ahead.
GBP/INR Losses Forecast on UK Sales and Borrowing Data
There could be more Pound to Rupee movement in the near-term, when Thursday’s UK retail sales stats come out.
Unfortunately for Pound traders, forecasts are for lower reported sales in all fields. For the most important annual readings, economists predict sales to slow, with and without fuel included.
Closing off the week, expectations are for Friday’s borrowing deficit to widen; this might cement a Pound to Rupee decline before the weekend.
There is little high-impact Indian news remaining this week, so the Rupee could see greater movement from crude oil price fluctuations.
If crude oil prices fall then the Rupee might appreciate against the Pound, because lower prices mean more in-demand oil can be imported for fuelling and industrial processes.
Interbank Pound to Rupee (GBP INR) Exchange Rates
At the time of writing, the Pound was trading tightly against the Indian Rupee at an exchange rate of 85.7652. The Rupee to Pound exchange rate was in the region of 0.0117.