ECB: Small Upward Revision To Latest ECB Wage Tracker; Broader Trend Intact
There were slight upward revisions to the ECB’s forward looking wage tracker compared to the April vintage, but the broader theme of softening compensation pressures remains intact.
- The tracker excluding one-off payments is seen at 3.082% in Q4 2024 (vs 3.024% in the April iteration). The ECB projects compensation per employee growth at 2.8% by the last quarter of this year, down from 3.8% in Q1.
- There were also upward revisions to the share of employees covered by the wage tracker (45% in Q4 2025 vs 43% in April).
- From the ECB: “The downward trend of the forward-looking wage tracker for the remainder of 2025 partly reflects the mechanical impact of large one-off payments (that were paid in 2024 but drop out in 2025) and the front-loaded nature of wage increases in some sectors in 2024.”
- Little impact in ECB implied rates following the release, as expected.
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BOE: Lombardelli was "balanced between holding and cutting" in May
- Lombardelli: "Coming into the May policy round I was balanced between holding and cutting rates. Taken together, the combination of further gradual progress on disinflation and the trade developments led me to conclude that a 25bps cut was the appropriate decision for May."
- So that puts Lombardelli in the same camp as Governor Bailey, leaving one more of Ramsden, Breeden and Greene in the "finely balanced" before trade camp - with the other two seeing a cut in May irrespective of international developments.
- Looking through the rest of the speech she doesn't really differentiate between her personal view and the wider committee view, so it is hard to really gauge whether she fully agrees with the central view or if she sees risks skewed one way or the other.
- "The 25bps reduction to Bank Rate would not lead to large regrets if the economy evolves as in either of the two scenarios. More broadly, the evidence suggests that at 4.25% monetary policy is still restrictive, so if we were to find ourselves in a world with greater inflation persistence than expected, policy would still be providing pressure to squeeze inflation out of the system. And it would be doing that whilst having taken out some insurance against the risk of a larger fall in demand through the 25bps cut in May."
GBPUSD TECHS: Has Cleared The 20-Day EMA
- RES 4: 1.3605 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 3: 1.3550 High Feb 24 ‘22
- RES 2: 1.3510 1.236 proj of the Feb 28 - Apr 3 - 7 price swing
- RES 1: 1.3402/3444 High May 6 / High Apr 28 / 29 and the bull trigger
- PRICE: 1.3179 @ 09:06 BST May 12
- SUP 1: 1.3163 Low May 12
- SUP 2: 1.3083 50-day EMA
- SUP 3: 1.3041 Low Apr 14
- SUP 4: 1.2968 Low Apr 11
GBPUSD has started this week’s session on a bearish note as the pair extends the correction that started Apr 29. The 20- day EMA has been breached. Furthermore, a minor head and shoulders formation on the daily chart reinforces the likelihood of a corrective pullback near-term. Key support to watch is 1.3083, the 50-day EMA. The bull trigger has been defined at 1.3444, the Apr 28 / 29 high. A break would resume the uptrend.
EGBS: Citi Like 20-Year RFGB/Bund Tighteners
Late on Friday Citi noted that they “prefer EGB longs via 20-Year RFGB/Bund tighteners given the underperformance of FAN vs. the periphery in the recent tariff de-escalation rally and of the 20-Year Finnish sector on EGB curves due to supply indigestion, which we believe has peaked”.
