UK data was expected to be the major event of the day. The main focus was on wages, but other components of the report were also important.
U.K. workers saw their real earnings fall in the first quarter for the first time in 2,5 years, despite unemployment dropping to its lowest in more than four decades. Regular pay adjusted for inflation fell 0.2 percent, the Office for National Statistics said Wednesday. Nominal earnings slowed to growth of 2.1 percent, an eight-month low. The nemployment rate fell to 4.6 percent, the lowest since 1975.
Employment rose 122,000 to a record 31.9 million and unemployment dropped 53,000 to 1.54 million. Vacancies climbed to a record level and average hours worked remained close to their highest rates since 2002. The BOE sees unemployment staying around current rates, slightly above the rate it can sustain without generating inflation. Inflation is heading toward 3 percent this year and squeezing consumer spending, the engine of the economy. In March alone, real earnings fell 0.5 percent, the biggest decline since July 2014.
For most Bank of England policy makers, the fact that earnings remain subdued despite a healthy labor market suggests there is still enough slack in the labor market to keep interest rates at a record low. While officials see wages rebounding next year, the outlook
for 2017 is subdued as Brexit uncertainty and higher costs brought about by the ailing pound lead employers to clamp down on costs.
UK pound is trading below a resistance at 1.2950. A break above is needed for further gains. source: xStation5