GBP weaker on labor data

No surprises from the BoE minutes as all nine MPC members voted to keep policy unchanged. 

Comments on GBP made a more prominent appearance given the currency's appreciation in February. The Committee acknowledged that divergent monetary policies between UK and euro area could cause further GBP strength and keep inflation below target for longer. 

Labour market data was weaker than expected with average weekly earnings growth at 1.8% y/y (cons: 2.2%) while the unemployment rate failed to tick lower at 5.7% (cons: 5.6%). 

RBC Capital Markets notes...

• The weaker earnings growth should be no surprise to the MPC given earlier warnings of base effects in play. 
  
  
• Separately, the pre-election Budget should provide the government with some good news, according to our UK team. Favourable macroeconomic forecast revisions (lower inflation forecasts should cut spending on debt servicing and benefits) could provide the Chancellor with a GBP5bn improvement in the fiscal outlook for 2015-16. 
  
  
• We wouldn't be surprised if at this stage of the electoral cycle, some of this is used to fund some of the eye-catching policies mentioned in the press, such as an increase in the threshold for personal allowance on income tax.