Today, UK businesses are more concerned about US trade policy than any other factor. They consider it to be one of the top three biggest sources of uncertainty impacting their operations. In a recent survey carried out by the Bank of England (BoE), firms reported that they were most worried by US trade policies. About 70% of them think that any rollbacks or tweaks to these policies won’t really make a difference in their business operations.
That’s why so many UK businesses understand the potential impacts of US trade decisions. Yet they appear somewhat insulated from all these changes, displaying unwarranted confidence in their death throes notwithstanding.
The predicted year-ahead wage growth is 3.7%, down 0.1% from earlier predictions. This aggressive reduction reflects the current economic environment, characterized by rising inflationary pressures and growing wage inflation, which continue to be watched carefully.
Now just 12% of firms consider the expected wage increase feasible. This is a major decline from the 22% who felt that way just a few months ago. This change speaks to the fact that business leaders are losing their naiveté. They hesitate because they don’t think they can offer competitive wages or better with the continued economic uncertainty.
The survey decreased odds of rising consumer price index (CPI) inflation expectations becoming destabilizing for UK firms.
“One-year ahead expected CPI inflation by the UK firms remained unchanged at 3.2% in the quarter to May.” – The latest Bank of England (BoE) Decision Maker Panel (DMP) quarterly survey
As companies adjust to these unknowns, the foreign exchange markets are similarly in flux. At the time of writing, GBP/USD currency pair is trading just below the 1.3570 figure. That represents a small advance of 0.05% for the day. The near-term for GBP/USD shows a very defensive trend as the bids have built a defensive wall, which shows that investors remain cautiously optimistic.