Never miss a story from Daniela Sabin Hathorn

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Daniela Sabin Hathorn

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

GBP Analysis and Talking Points

  • GBPUSD and EURGBP remain mostly unchanged after jobs, wages data
  • Third Brexit vote is off the table unless there are “meaningful changes”

The reaction of the pound to jobs data has served to reinforce the continued concerns over Brexit as the numbers are released 10 minutes before schedule. The Pound had a very short rebound against both the Dollar and the Euro as figures beat expectations, but both pairs re-adjusted quickly as Brexit hopes have taken another hit.

Job creation has boomed at the beginning of 2019, as the change in employment has increased to 220k, up from 167k in the month of December and beating expectations of just 120k. On the other hand, average weekly earnings remained stable at 3.4%. UK inflation remained is currently 1.8%, leaving the average worker’s pay increasing to 1.6% in real terms.

Unemployment continued to fall to 3.9%, its lowest level since 1974. This means that UK businesses are hiring more staff rather than increasing investment and capital spending as employment decisions are quicker and easier to make ahead of the uncertainty around Brexit.

The Bank of England is expected to keep rates unchanged when they meet on Thursday as they prefer to push back meaningful rate hikes until some of the Brexit uncertainty has cleared. Lower rates boost real spending in the economy, which will in turn increase earnings and inflation leading to an increase in economic output.

DailyFX senior currency strategist Chris Vecchio will be covering the Bank of England Meeting Live

What now for Brexit?

The hope for Brexiteers have again taken a hit as Parliamentary Speaker John Bercow ruled out Theresa May being able to bring her agreement to Parliament for a third vote unless it has “substantial changes”. With just 10 days to go until the UK is due to leave the EU, ministers have warned there is a “constitutional crisis” as Theresa May will now have to attend Thursday’s EU summit without a plan in place for the future of her deal, meaning she will most likely have to ask the EU to grant the UK an extension longer than the original 3 months planned.

The pound saw a 2% rally against the dollar at the end of last week as MPs rejected leaving the EU with no deal in place signalling that investors perceive a hard Brexit as a bad outcome for the British Economy. The pound has seen little change in the last 12 hours as the announcement of a third vote been blocked pushes the UK towards a longer extension than originally planned. The fact that there has been no bearish pressure after the announcement means that investors perceive a longer extension to be better for the pound as there are currently no alternative to Theresa Nay’s failed exit plan.

GBPUSD PRICE CHART:1 Minute (Intraday)

Please add a description for the image.

EURGBP PRICE CHART: 1 minute Time-Frame (Intraday)

Please add a description for the image.

IG Client Sentimentshows retail are 48.7% net-long GBPUSD, a bearish contrarian indicator. However, daily and weekly changes give us a mixed trading bias.

KEY TRADING RESOURCES:

--- Written by Daniela Sabin Hathorn, Junior Analyst