The Pound fell against the U.S dollar on Wednesday after the Bank of England cut its forecast for U.K. wage growth and said the pace of pay growth would be a key factor in determining how quickly interest rates will rise. The drop in sterling came after the BOE cut halved its forecast for wage growth in 2014, cutting it to 1.25% from 2.5% previously. It sees pay growth picking up to 3.25% in 2015, and more strongly in 2016. The bank reiterated that when rates do start to rise they will do so a “small, slow” manner.
Also, the Office of National Statistics reported that average earnings, excluding bonuses, rose by just 0.6% in the three months to June. Including bonuses, pay packets contracted by 0.2% during the quarter, the first decrease since 2009. The U.K. unemployment rate fell to 6.4% in the quarter, in line with expectations and down from 6.5% in May. The number of people claiming unemployment benefits fell by 33,600 last month, beating expectations for a decline of 30,000. June’s figure was revised to a drop of 39,500 from 36,300 previously.
With this fundamental backup, intraday bias remains on the downside as 21 crosses 51 EMA to the downside with MACD, SSRC and RSI oscillator showing more bearish momentum is expected in the medium term picture. More decline to 1.66063 is expected with 1 hour, 4 hours and Daily time-frames complimenting one another southward.