Average earnings in the UK rose 1.9% as expected, lower than an upwards revised 2.1% last time. Excluding bonuses, we had an upside surprise with 2% instead of 1.8% expected and 1.9% last time. The unemployment rate remained unchanged at 5.1% which was a disappointment. Good news in 2016: 14.8K people left the jobless ranks, much better than expected and there was a good revision for December: a drop of 15.2K.

GBP/USD initially dropped from the pre-release rally, but things are stabilizing now.

The UK was expected to report a rise of 1.9% in average hourly earnings in December, slower than 2% seen beforehand. Excluding bonuses, the figure was predicted to stand at 1.8% after 1.9%. The unemployment rate carried expectations for a drop from 5.1% to 5%. Jobless claims for January (Claimant Count Change) was predicted to drop by 3K after 4.3K.

GBP/USD was recovering towards the release, rising towards 1.43 from the lows of 1.4244 seen earlier. We often see markets front-running UK releases.

This week hasn’t been so good for sterling: the lone hawk in the MPC, Ian McCafferty, said that the case for raising rates is less compelling. In addition, core inflation came out below expectations.

And in addition, after a few positive days in markets, the mood soured once again and this works against the “risk” pound.