UK Jobs Preview: GBP/USD to extend the BoE-fueled gains on another robust report

The UK’s upcoming labor figures will likely remain robust thanks to the government’s largesse – the furlough scheme is set to run through at least October. The pound needs only minor support to continue rising after the boost from the Bank of England (BoE), FXStreet’s analyst Yohay Elam reports.

Key quotes

“Economists expect June’s jobless rate to remain at 3.9%, and after three months of positive surprises, that makes perfect sense.” 

“If Britain’s official unemployment rate remains depressed, it would support the pound. An increase to 4% would likely be shrugged off, while only 4.1% or higher – returning to levels seen in 2018 – would be worrying.”

“The second significant statistic is Claimant Count Change which is for July, a more recent figure shot above one million in April and hit around half a million in May. However, after these two terrible months, applications dropped by 28,1000 in June. The ongoing gradual reopening in July has likely pushed claims lower despite the hiccups in Leicester and later Manchester and other areas. It would take a substantial increase in monthly applications to send sterling lower.” 

“An upbeat or an employment report that meets expectations could continue supporting the pound. The wind is blowing in favor of sterling after the BoE painted a relatively rosy picture. A truly horrible report – potentially a mix of a leap in June’s unemployment rate and a surge in July’s claims is needed to change the picture.”