- The UK unemployment rate unexpectedly fell to 5.2%, least since May 2008
- Core weekly earnings slowed to 2.0%, below expectations
- GBP/USD little changed with the Fed firmly in focus
The British Pound was little changed versus the US Dollar after today’s UK employment data. The unemployment rate dropped to 5.2% from August to October, below an unchanged 5.3% rate expected by economists. The figure marked the lowest rate in seven-and-a-half years. The UK added 207K jobs, beating expectations for an addition of 150K jobs, raising the number of people employed to 31.3 million. On the other hand, Jobless Claims signaled a rise of +3.9K, worse than the expected +0.8K. The prior reading was revised down to 0.2K. Further data below expectations was in wage growth, which signaled a slowdown in the last three months. Core average weekly earnings (which excludes bonuses) slowed to +2.0% in the last three months, below the expected +2.3%, and the prior revised +2.4%.
It seems that while the Jobless rate fell to near 2008 lows, the figure was offset by below expectation wage growth numbers. The labor market is a key factor for the BoE in deciding when to raise interest rates. With inflation far from the BoE’s inflation target of 2%, it appears that without wage growth picking up, there is less likelihood for rising prices, taking the pressure of the BoE for an imminent hike. Taking this into account, and the fact that later today, the Fed is widely expected to announce the first US rate hike in nearly a decade, the market seemed inclined to take too much into the data and the British Pound was little changed.
DailyFX Currency Strategist Ilya Spivak mentioned several scenarios for today with the Fed’s rate decision the major focus.
GBPUSD 5-minute Chart