GBP Higher On Fresh Wage-Growth Increase

Wages Rise AgainGBP is trading higher today on the back of the latest set of UK labour market indicators, which have helped keep hawkish BOE expectations entrenched. While the unemployment rate was seen unexpectedly rising to 4% from 3.8% prior, the average earnings index was seen jumping to 6.9% from 6.7% prior, above the 6.8% reading the market was looking for. This increase is bad news for the BOE, signalling that upward inflationary pressures remain alive and well in the UK.BOE Warns Against Wage IncreasesThe BOE has been particularly outspoken about the role that wage increases in the UK are having on keeping inflation elevated. Governor Bailey has warned against corporations handing out pay increases and urged individuals against seeking raises. However, with the cost-of-living crisis gripping the UK, many are still seeking extra compensation. With UK inflation having jumped higher again last month, the market is focused on further rate hikes from the BOE. Given that many other central banks have pivoted away from tightening or are moving towards doing so, this leaves GBP open to further price gains near-term as higher money market rates attract investor capital.Technical ViewsGBPUSDThe rally off the 1.2659 level and the retest of the broken bull channel top has seen the market trading up to fresh YTD highs. With momentum studies strengthening, the focus is on a further push higher and a test of the 1.2992 level next. To the downside, any break below 1.2659 will turn focus to support at 1.2437 next.