All UK employment data points fall short of expectations: jobless claims (Claimant Count Change) are up 7K, breaking a long series of falls – the first rise since 2012. The unemployment is up to 5.6%. These are both very worrying signs. Average earnings are up 3.2%, a bit short of expectations and ex-bonuses are up 2.8%. Wages continue accelerating their rises, by the most in 5 years, but a bit under expectations.
GBP/USD falls around 50 pips to the 1.56 level.
The sliver lining is that the drop in employment is led by part time jobs, with full time jobs actually rising 30K.
The UK was expected to report a drop of 8.9K unemployed in June, following a slide of 6.5K in May. The unemployment rate for May was predicted to remain unchanged at 5.5% and average hourly earnings carried expectations for a leap of 3.3%, up from 2.7% in April.
GBP/USD traded on high ground at 1.5650 towards the release and EUR/GBP was around 0.7040.
Sterling’s star rose yesterday with bullish comments from Carney. The head of the Bank of England said that the moment to raise rates is coming closer and this gave the pound a big boost.
While the employment situation looks promising, including wages, inflation remains quite depressed, and this is the caveat for a rate hike, according to the same testament from Carney.
More: Bullish sign for GBP/USD.
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