GBP Edges Higher on Strong UK Wages, Brexit Remains Key to Direction
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)
--- Written by Justin McQueen, Market Analyst
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