BOE: Greene Flags Importance of April Pay Settlements in Outlook
Some interesting, but suitably dovish, comments from BoE's Greene - who stresses the importance of April pay numbers for the UK economy. We note that she may not be referring to a specific release here (April AWE data isn't due until June 10th, while the BoE's Q2 Agents Survey, covering April, isn't until June 19th), but to the month itself, due to April's importance in the pay review calendar. Brightmine - who collate the pay trends report - note that almost half of all annual pay settlements take effect during this period.
- They see early indications from the first April 2025 pay deals "suggest that the overall pattern is holding firm. The median basic pay award in April stands at 3%, with the middle half of deals ranging between 2% and 3.5%. Notably, 75.5% of these settlements are lower than the award given at the previous review for the same group of employees." This would be infitting with Greene's view that we "should see wage growth come down as the market eases".
- Greene also notes the potential disinflationary risk to tariffs, as she states that she sees trade diversion "quite quickly" - which may mean downward pressure on import prices for the UK.
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EURGBP TECHS: Finds Support
- RES 4: 0.8494 High Aug 26 ‘24
- RES 3: 0.8474 High Jan 20 and a key resistance
- RES 2: 0.8428/8450 High Mar 18 / 11 and the bull trigger
- RES 1: 0.8395 High Mar 24
- PRICE: 0.8369 @ 14:41 GMT Mar 26
- SUP 1: 0.8333 Intraday low
- SUP 2: 0.8321 61.8% retracement of the Mar 3 - 11 bull leg
- SUP 3: 0.8391 76.4% retracement of the Mar 3 - 11 bull leg
- SUP 4: 0.8241 Low Mar 3 and a key support
EURGBP has traded lower this week. However, today’s rally from the intraday low highlights a possible reversal. A strong daily close today would strengthen the bullish significance of today’s bounce. Note that MA studies are in a bull-mode position. This suggests that the pullback from the Mar 11 high, has been a correction. Resistance to watch is 0.8395, the Mar 24 high. Key near-term support lies at 0.8333, today’s intraday low.
SNB: Quarterly Bulletin / Business Cycle Signals Provide Backdrop of SNB Cut
The SNB has published their "quarterly bulletin" as well as their quarterly "business cycle signals". Key highlights:
- "For the next two quarters, companies expect purchase and sales prices to remain stable or rise slightly (chart 8). On the one hand, reductions in the price of electricity and gas are curbing costs. On the other hand, the rising prices of certain raw materials and inputs are leading to slight upward pressure on purchase prices in manufacturing and construction" - suggests risks of material deflation in Switzerland are limited for the moment "
- The companies surveyed report solid turnover growth overall in the first quarter. Growth momentum in the services sector and construction remains robust. Turnover in manufacturing also saw tangible growth, having barely increased in previous quarters" - the KOF indicator points towards robust growth ahead
- "Companies are no longer as concerned as in previous years about the shortage of specialist staff and recruitment difficulties. Staffing levels are approximately in line with companies’ needs" - mirroring the softening labour market in Switzerland
- "The growth outlook is brightening somewhat but is still subject to considerable uncertainty. In particular, as long as the precise details of the new US administration’s trade policy are not known, the effects are difficult for companies to assess" - as expected given the current global backdrop
Link to the quarterly bulletin (also contains business cycle signals
publication on the back): https://www.snb.ch/en/publications/quarterly-bulletin/2025/quartbul_2025_1_komplett
GILTS: /SWAPS: TD Securities Maintain Recommendations Post-Spring Statement
In the wake of the Spring Statement TD Securities “continue to see value in 10s30s flatteners and paid 5s10s30s fly. Also, we hold long bias for long-end ASW.”
