UK Employment Data Supports the British Pound on the Dips
Strong UK employment data sent the pound soaring across the board, but will momentum continue for the British economy?
United Kingdom employment data was released a couple of days ago. More precisely, the Unemployment Rate and the Claimant Count Change for the previous month were made public, and both pieces of economic data beat expectations.
The Claimant Count Change reflects the change in the number of people who claim unemployment benefits. The lower the number, the better the data, because it means that more people have found employment since the previous month. The 10.1K claimants figure was much better than the 24.5K expectation, and the Unemployment Rate reduced to 4.9% (compared with a 5% expectation).
Details of the Labour Market Overview Report
The report showed a relatively stable jobs market in recent months, with the employment rate estimated at 75.1%. This is 1.4% lower than a year ago when COVID-19 was declared a pandemic and the number of payrolled employees fell by more than 800k people: most of them in the accommodation and food services sectors, and over half of them aged under twenty-five.
British Pound Supported on Dips
The British pound reacted strongly to the data, as reflected by the GBP/USD pair that climbed back to 1.40. Also, the EUR/GBP dropped from resistance as traders bought the pound.
Since Brexit, the United Kingdom has benefited from an efficient vaccination campaign while enduring a long lockdown. The economy is set to reopen gradually, so the economic data — including jobs data — should only improve.
However, this doesn’t mean that the British pound will keep rising. The FX market is built on exchange rates that reflect the value of one currency relative to another. So, if the GBP/USD declines, it could be due to the dollar.
All in all, the UK employment data sends a positive signal for the period ahead. If followed by economic growth, we should not be surprised to see the pound reacting accordingly.