Sterling continues to edge higher
18 April 2007
18.04.07
Sterling rallied aggressively once again this morning as average earnings growth in Britain picked up at its fastest pace in nearly three years. The Office of National Statistics showed average earnings rose by 4.6% in the three month period to February from 4.2% in January although the rise was purely driven by bonuses.
The other important event was the release of the Bank of England minutes from their meeting earlier this month which revealed a 7-2 vote in favour of leaving rates on hold. The two hawks, Besley and Sentence believed that the balance of risks to inflation were to the upside justifying an immediate 25bps hike. Of the remaining seven members, in one camp were those concerned about the potential for a US economic slowdown and the potential impact this could have on the UK economy while the second camp thought it more appropriate to raise with the next quarterly inflation report in May.