Talking Points
- The UK unemployment rate dipped to its lowest for 42 years to 4.6% in March, below both the expected 4.7% and the previous month’s 4.7%
- Average weekly earnings (3m YoY) edged up to 2.4% from 2.3% but remained below the 2.7% headline inflation rate, suggesting a further squeeze on consumers.
- GBP/USD barely reacted to the data.
- Check out the DailyFX Economic Calendar and see what live coverage of key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.
The squeeze on UK consumers, the mainstay of the British economy, is continuing, with average weekly earnings (3m YoY) edging up to 2.4% from the prior 2.3% but remaining below the latest headline inflation figure of 2.7%. The number was as expected and GBP/USD barely moved on its release.
Moreover, excluding bonuses, there was an unexpected dip in average earnings to 2.1% from 2.2%, emphasizing the difficulties consumers face.
There was better news however in the accompanying jobs data, which showed an unexpected fall in the unemployment rate to a new cyclical low of 4.6% from the prior 4.7%. The claimant count rose to 19,400 from an upwardly revised 33,500 – worse numbers that the 7,500 increase predicted. Sterling, though, was barely affected, continuing to hover between 1.29 and the 1.30 round-number resistance level.
Chart: GBP/USD Five-Minute Timeframe (May 17 Intraday)
There was little to concern policymakers in the release and UK interest rates are still likely to remain unchanged for the foreseeable future.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
Follow Martin on Twitter @MartinSEssex
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