GBP/USD’s corrective drift extends after softer wage data. Economists at Scotiabank analyze the pair’s outlook.

The dip in Cable retains a corrective look

Average Weekly Earnings growth eased to 5.6% in the three months through January (down from 5.8% and a bit below consensus estimates for a 5.7% gain). Ex-bonus pay eased to 6.1% over the same period, against expectations of a steady (6.2%) outcome. Jobs data showed some softening in labour markets. Easing pay pressures and a cooling labour market will be welcomed by policymakers.

GBP losses from last week’s high have extended a little further today but the dip in Cable retains a corrective look (bull flag potential), implying that gains could resume on a rebound back above 1.2815/1.2820 intraday. 

Support is 1.2755/1.2765.