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GBP Edges Higher on Strong UK Wages, Brexit Remains Key to Direction

GBP Edges Higher on Strong UK Wages, Brexit Remains Key to Direction

Justin McQueen,
What's on this page

GBP Analysis and Talking Points

  • UK Jobs Report Suggests Tightening Labour Market
  • The Focus is on Brexit

UK Jobs Report Suggests Tightening Labour Market

The Pound edged higher in the wake of the latest jobs report, in which the Bank of England focussed wage growth components had printed above expectations. Risks had been tilted to the upside for the wage components given that NHS workers (roughly 1.9mln) had received a 3% pay increase in July and thus supporting overall wage. The unemployment rate stood pat at 4%, which remains below the BoE’s NAIRU forecast, while employment growth fell short of expectations at 3k (Exp. 28k). Overall, this report would be an encouraging sign for the BoE who have long expected wage growth to pick up.

The Focus is on Brexit

The direction of the Pound will continue to be determined by the sentiment surrounding Brexit, which has been relatively upbeat as of late. In turn, GBPUSD has had a firm hold above the psychological 1.30 handle with eyes now on 1.31. Elsewhere, option volatility in GBPUSD on a 1-month timeframe (Time in which a possible deal could be reached) has risen to the highest level in 6-months with the premium for GBP puts (right to sell) continuing to recede.

GBP/USD PRICE CHART: 1-Minute Time-Frame (Intra-day)

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.