The Office of National Statistics (ONS) will be releasing the monthly jobs data for the UK today at 0830GMT. The median estimates from economists polled, expect to see the UK unemployment rate remain steady at 5.6%, unchanged from last month while expecting to see a drop in the claimant count change to 1.4k from 7k a month ago. The median estimates for the average earnings index is expected to show a weaker pace of wage growth at 2.8%, down from 3.2%.
The GBPUSD has been stuck in a sideways range ever since investors were disappointed to see that the BoE rate hike expectations did not seem as hawkish as the comments from various MPC members sounded. Of the 9 voting members, only 1 voted for a 25bps rate hike signaling that the Bank of England would prefer to wait and watch before signaling a rate hike. Inflation has been a key concern for the country which expects the consumer price inflation to remain subdued for the most part of this year as falling Oil prices and a stronger Pound Sterling seem to put downward pressure on inflation.
A beat on the estimates in the jobs report would however shift the stance as investors start to rebuild hopes for a more hawkish BoE at its next meeting. In this aspect, the markets will be particularly focused on the average earnings index and the unemployment rate.
GBPUSD previously enjoyed a strong rally as the Cable gained over 4.4% after hitting lows of 1.519 earlier in June this year. However the Cable came under pressure as the US Federal Reserve started to signal a rate hike this year, expected to be in September. The Cable then fell from the highs of 1.5878 to fall by -3.2% to form a higher low at 1.5365. Prices then attempted another rally, boosted by hawkish comments from various BoE voting members before moving sideways after the August BoE minutes showed that the Central Bank was is no hurry to hike rates.
With the exception of the GBPUSD, most other Pound Sterling crosses have managed to fare well with GBPCAD testing new highs of 2.06 just a few days ago while the GBPAUD continues to trade in a strong uptrend.
Today’s labour market data from the UK could be quite important as investors look to the average earnings index for signs of any wage growth, which is a precursor to inflation. The average earnings index hit a high of 3.2% for the month of June posting a fresh high seen since 2010 and remains in an uptrend.
