UK Jobs Preview: Data to unmask the real state of the economy, pounding the pound

The UK’s last publication of labor data for 2020 will likely provide a reality check and weigh on the pound. However, if reporters talk about an imminent Brexit deal, the chances that the pound could fall diminish, FXStreet’s Analyst Yohay Elam reports. 

Key quotes

“The upcoming report for October is set to show the jobless rate top 5%, which would be the worst since early 2016. An increase above that round number would likely serve as a reality check and weigh on sterling, even if the actual figure only meets expectations.” 

“If the data mostly point to a deterioration in the UK’s labor conditions, the pound has room to fall. However, it is essential to note that Brexit headlines have the upper hand in impacting cable. A weak jobs report would have a stronger impact if it goes with the trend – if Brexit headlines are downbeat at the same time. On the other hand, optimism about an upcoming agreement will likely push traders to dismiss weak job statistics.”

“A sub-5% Unemployment Rate would be pound-positive – but mostly if sterling is already riding higher on hopes for an EU-UK deal. If strong results come amid reports that talks are about to collapse, GBP/USD will likely shrug it off.”