The Pound to Swedish Krona (GBP SEK) exchange rate remains flat as the UK’s latest wage figures failed to impress investors.
Sterling (GBP) Falters as Wage Growth Continues to Lag Behind inflation
The Pound is struggling to advance this morning as concerns mount over the growing wage gap facing UK workers.
According to data published by the Office for National Statistics (ONS), average earnings in the UK rose by 2.2% in August, failing to show any growth after July’s figures were also revised up to 2.2%.
However, with inflation reaching a dizzying 3%, the divergence shows that effective pay for British workers has become worrying low.
Stephen Clarke, economic analyst at the Resolution Foundation said;
‘Today’s figures confirm the big picture trend that the UK labour market is great at creating jobs, but terrible at raising people’s pay.’
‘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 per cent bigger per person since then.’
Meanwhile, the accompanying employment figures showed that the UK’s jobless rate held at a 42-year low of 4.3% in August, prompting further questions about the anaemic wage growth hitting workers.
Low unemployment has historically led to faster wage growth as demand for labour outstrips supply.
The leading theory behind this discrepancy is that employers are reluctant to spend more due to the uncertainty of Brexit, meaning that low wage growth could persist for at least a couple more years.
Further Fall in Unemployment to Bolster the Swedish Krona (SEK)?
Meanwhile Sweden will release its own employment figures tomorrow in the only scheduled domestic data release for the week.
With Sweden’s unemployment rate having fallen from 7.4% to 6% over the past couple of months, it is currently within touching distance of the long-term average of 5.9%.
While economists currently predict that it will remain stable at 6% in September, a possible drop could help the Swedish Krona strengthen and reverse some of the losses the currency experienced against Sterling last week.
GBP SEK Exchange Rate Forecast: UK Retail Sales to Decline in September?
Looking ahead, the GBP SEK exchange rate may tumble on Thursday with the release of the UK’s latest retail sales data.
Economists forecast that sales will have declined by -0.1% in September after climbing 1% the month before, with fears that the slowdown in sales could weigh on the UK’s third quarter GDP figures.
Meanwhile, SEK Investors will be closely watching Sweden’s employment report tomorrow in hopes that the jobless rate will have fallen again last month.