GBP/USD Volatile on UK Jobs Data as Jobless Claims Fall
- The UK unemployment rate unchanged at 4.9%, lowest since September 2005
- July’s Jobless Claims (post-Brexit) fell 8.6K, better than the expected 9.0K addition
- GBP/USD bounced higher, but was quickly sold to erase gains as the figures hit the wires
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The British Pound pushed higher versus other major currencies, but then quickly reversed for an overall tepid response, after today's UK jobs data printed figures generally in line with expectations.
It’s important to note that the monthly Claimant Count estimates related to July, which was after the referendum, but the remainder of the estimates were mainly for the April to June period.
The Office for National Statistics (ONS) reported that the unemployment rate from April to June was unchanged at 4.9%, as expected, which is the lowest rate since September 2005.
The UK added 172K jobs in the same time period, better than the expectations of a 153K print, but below the prior 176K figure.
The Jobless Claims figure, which might have been in focus due to the fact that it was a post-Brexit reading, beat expectations and signaled a decline of 8.6K, better than the expected call a 9.0K addition, and the prior revised 0.9K print.
Wage figures showed that Core average weekly earnings (which excludes bonuses) rose to 2.3% in the three months to June from the prior 2.2%, in line with expectations. Average weekly earnings including bonuses was at 2.4%, as expected, and above the 2.3% prior print.
Initial reaction from the British Pound saw a spike higher, perhaps because of the upbeat Jobless Claims figure which reflected a post-Brexit month. With that said, follow through proved limited as all other prints reflected data prior to the vote. The fact that the British Pound was unable to sustain gains might imply the market interpreted the figures as having limited implication for near term BOE policy.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 63.5% of traders are long the GBP/USD at the time of writing. The SSI is mainly used as a contrarian indicator implying a short bias.
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--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.