UK Jobs report overview

Early Tuesday, the UK’s Office for National Statistics (ONS) will release the April month Claimant Count figures together with the Unemployment Rate in the three months to April at 06:00 AM GMT.

Taking into account, the announcement of the interest rate decision by the Bank of England (BOE), which is due on Thursday, the employment data holds significant importance. Most probably, the BOE won’t accelerate its interest rates beyond 25 basis points (bps) as the growth rate in the economy is not much lucrative currently amid advancing oil prices.

The consensus for the UK employment data is indicating that the labor market will tighten further as the Claimant Count Change will slip further to -42.5k vs. -56.9k reported earlier. The economic catalyst dictates the number of individuals who have claimed jobless benefits.

Also, the Unemployment Rate is expected to slip to 3.6% from the former print of 3.7%. A decline in the jobless rate bolsters the labor market condition in the UK economy.

The economic data that investors are worried about is the Average Earnings Excluding Bonus. A meaningful fall is seen in the catalyst to 4% from the prior print of 4.2%. In times, when inflation is at its peak in the UK economy, a decline in wages will dent the paychecks of the households. This will bring a serious decline in the aggregate demand and eventually in the Gross Domestic Product (GDP) of the economy.

Deviation impact on GBP/USD

How could they affect GBP/USD?

The pound bulls have rebounded after hitting a low of 1.2107 in the late New York session. A recovery in the asset is backed by a minor fall in the US dollar index (DXY) and higher seen UK employment data. The estimated figures are hinting at an improvement in the labor market, which calls for a buying action in the asset, however, a broad-based strength in the DXY will restrict gains for cable.

Although the US employment data holds significant importance for the cable investors, the major focus will remain on the monetary policies from the Federal Reserve (Fed) and the Bank of England (BOE), which are due on Wednesday and Friday respectively.

Technically, the asset has displayed exhaustion signals after a sheer downside move in the last two trading sessions. A modest recovery in the cable is expected to extend further after violating the round-level resistance of 1.2200, which will send the asset towards the May 16 high at 1.2300, followed by the May 19 low at 1.2330.

Alternatively, the greenback bulls will strengthen if the asset drops below Tuesday’s low at 1.2107. An occurrence of the same will drag the asset towards the 18 May 2020 low at 1.2075. A breach of the latter will unleash the asset to find a cushion around the psychological support at 1.2000.

Key notes

GBP/JPY Price Analysis: Bounces off 162.60 support confluence ahead of UK jobs report

UK business confidence tumbles to one-year low over inflation fears – Times

About UK jobs

The UK Average Earnings released by the Office for National Statistics (ONS) is a key short-term indicator of how levels of pay are changing within the UK economy. Generally speaking, the positive earnings growth anticipates positive (or bullish) for the GBP, whereas a low reading is seen as negative (or bearish).