Forex Trading Library

What Matters In Today’s UK Jobs Report?

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After yesterday’s disappointing inflation figures in the UK, all eyes are headed toward the monthly jobs report today, which is set to have a notable impact on the markets ahead of the key event of the week, which is the Bank of England’s rate decision tomorrow. Both events hold great significance for the upcoming trend over the coming weeks.

The jobs report includes three major numbers:

  • Average Earnings Index
  • Claimant Count Change
  • Unemployment Rate

Definitions

Average Earnings Index: This index measures the change in the price on businesses and the government’s pay for labor, including bonuses. In short, this is called wage growth, which is a leading indicator for consumer inflation. When businesses increase labor pay, the higher costs are passed on to the consumer through price change.

Claimant Count Change: This index measures the change in the number of people claiming unemployment. It is also called jobless claims or the unemployment change. Lower jobless claims means that the labor market has enough jobs to fill, which is seen as a positive indicator for a lower unemployment rate in the future.

Unemployment Rate: This index calculates the percentage of the total work force that is unemployed but has been actively seeking a job over the past three months.

What To Look For In Today’s Report?

Over the past year, the Bank of England was looking for an improvement in wage growth, one that allows it to say that the economy is picking up and that the increase should be translated into higher inflation and higher growth. However, this was the case before the Brexit. Today, all figures are important. The Bank of England will be happy to see higher wages, lower jobless claims and lower unemployment. If this happens today, the Bank of England could show a moderate tone in tomorrow’s decision.

How This Will Impact GBP

This is a straightforward. A better than expected report (higher wages, lower jobless claims and unemployment rate) should boost GBP pairs across the board, and GBP might be the strongest currency during the European session.

On the other hand, a slowdown in wage growth, falling to 2.1% down from 2.4% (today’s market expectations) with higher jobless claims and unemployment rate, would keep the British Pound under pressure to continue with yesterday’s trend.

Support and Resistance

Symbol S3 S2 S1 Pivot R1 R2 R3
GBPUSD 1.2947 1.3056 1.3126 1.3235 1.3305 1.3414 1.3484
GBPJPY 132.75 133.58 134.44 135.27 136.13 136.96 137.82
GBPAUD 1.7364 1.7450 1.7562 1.7648 1.7760 1.7846 1.7958
EURGBP 0.8312 0.8364 0.8434 0.8486 0.8556 0.8608 0.8678

GBPUSD Technical Chart 

GBPUSD 4H Chart

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