GBP/USD Having Second Thoughts At 1.25 – One Swallow Does Not Make A Summer
Skerdian Meta • 1 min read
The UK employment report is finally up. The report was not negative, despite the jump in unemployment claims. This means that the streak of negative employment reports is broken, for now…
In fact, today´s report was quite upbeat, considering that Brexit is happening and firms in both the EU and UK are gearing up.
The average weekly earnings in the UK picked up a point as they increased to 3.2% from 2.3% in the last reading (2.1% was the expected rate). Last month´s reading was revised to the higher 2.3%.
One point improvement is not enough to change the trend
The BOE must be relaxing slightly as a result because some of the pressure was taken off of them. They are in a tough spot with inflation surging and the economic data worsening, so they can´t cut rates to help the economy because inflation is already rising.
However, today´s employment numbers make the whole picture a little brighter and GBP a little better. As I said in the previous update, we needed to see at least a two point jump in weekly earnings for there to be a meaningful impact on the GBP.
So, this slight improvement is not good for GBP sellers, it doesn't give buyers a lot to go on either, hence the hesitation around 1.25.
GBP/USD had a wobble around these levels and now seems unsure of which direction to go in. I still fancy the downside since the buyers look too weak to push further up, so we might open a sell forex signal here any time now.