UK wages slow down to 1.8%, unemployment rate at 4.5%

The main figure coming out of the jobs report did not surprise: wages slowed down 1.8%. However, other figures were positive, helping the pound.

GBP/USD began moving higher ahead of the publication, bouncing from the lows of 1.2810 to 1.2830. After the release, the pair trades at 1.2860.

What is the data? Average earning excluding bonuses is up 2% y/y against 1.9% expected. The unemployment rate dropped to 4.5% against expectations for 4.6%. And the jobless claims for June climb by only 6K, better than 10K expected.

Is the data really positive? Not exactly. We still have a slowdown in wage growth and a rise in the number of jobless claims. But with expectations being so low, this is good news.

Average earnings were expected to slow down to an annual pace of 1.8% in May after increasing by 2.1% in April. Excluding bonuses, an acceleration from 1.7% to 1.9% was expected. Wages are running behind the rise in inflation, reflecting a drop in the standards of living.

The UK was expected to report a rise of 10,00 jobless claims in June after the Claimant Count Change advanced by 7.3K in May.

GBP/USD was trading around support at 1.2820. The pound dropped after BOE Deputy Governor Ben Broadbent opposed raising rates.

Further support awaits at 1.2775 and 1.27. Resistance is at 1.29 and 1.30.