GBPUSD Surges Above 1.28 After Stronger UK Employment
The release of the UK jobs report was the highlight of the European session, which has helped GBPUSD push higher.
The release of the UK jobs report was the highlight of the European session, which has helped GBPUSD push higher. It revealed a significant drop in the unemployment rate despite ongoing concerns about the reliability of the data. This stronger-than-expected unemployment figure, combined with a boost in market risk appetite, has driven the GBP/USD higher, with the pair trading around the 1.2820 level, up 0.3% for the day.
After a 4-cent surge, the GBP/USD pair briefly climbed above the 1.30 mark in early July. However, buyers struggled to sustain this momentum, leading to a nearly 4-cent drop from its peak in the latter half of July. This decline suggests that the bullish breakout was short-lived. The Bank of England’s recent rate cut, prompted by growing signs of economic weakness in the UK, contributed to the pair’s bearish reversal. However, the BOE did not hint at further immediate rate cuts, which allowed GBP/USD to find support at moving averages on the daily chart. This support led to the formation of a doji candlestick pattern, followed by a rebound of over two cents.
GBP/USD Chart Daily – MAs Held As Support
The headline figures suggest that the labor market has improved compared to previous months. However, the Office for National Statistics (ONS) has issued a strong caution, emphasizing “uncertainty” in the estimates and data collection methods. They advise careful interpretation of short-term fluctuations in headline rates, hinting that the quality of the survey may be compromised. When considering the wage data, the report becomes even more complex, as real wages declined during the three months from April to June. This complexity poses a challenge for the Bank of England (BOE) as it tries to assess the overall state of the labor market, especially given the existing concerns about the accuracy of the data.
UK Employment Data – 13 August 2024
UK Unemployment Rate:
- The ILO unemployment rate for June came in at 4.2%, lower than the expected 4.5%. This is a slight improvement from the previous rate of 4.4%.
Employment Change:
- Employment saw a significant increase with a change of 97k, far surpassing the expected 3k. The previous figure was 19k.
UK Average Weekly Earnings:
- Including Bonuses: Average weekly earnings rose by 4.5% over the three months year-on-year, slightly below the expected 4.6% and a drop from the prior 5.7%.
- Excluding Bonuses: Earnings excluding bonuses matched expectations, increasing by 5.4% over the same period, though this is down from the prior 5.7%.
July Payrolls Change:
- Payrolls increased by 24k in July, up from the previous figure of 16k, which was revised down to 14k.
Analysis: The UK labor market shows mixed signals. While the unemployment rate has decreased slightly, indicating some resilience in the job market, the slowdown in wage growth—both including and excluding bonuses—suggests that earnings are not keeping pace with inflationary pressures as strongly as before. The significant employment change is a positive sign, but the modest increase in payrolls could indicate cautious hiring practices amid economic uncertainty.
GBP/USD Live Chart
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