Sterling jumps notably as positive response to UK job data. Unemployment rate dropped to 4.3%, down from 4.4%, and beat expectation of 4.4%. Average weekly earnings exclude bonus rose 2.6% 3moy, accelerated from 2.5% 3moy. More surprisingly, Average weekly earnings include bonus rose 2.8% 3moy, accelerated from 2.7% 3moy and beat expectation of of 2.6% 3moy. Claimant count, on the other hand, rose 9.2k versus expectation of -5k.
- UK unemployment rate Jan: 4.3% vs exp 4.4% and prior 4.4%
- Average weekly earnings exclude bonus Jan (3M/Y): 2.6% vs exp 2.6% vs prior 2.5%
- Average weekly earnings include bonus Jan (3M/Y): 2.8% vs exp 2.6% vs prior 2.7%
- Claimant count Feb: 9.2k vs exp -5.0k vs prior -1.6k
The set of data overall should be more than welcomed by BoE hawks. In particular, wage growth is picking up pace and would add to their argument of a May hike. Be ready and we might see a hawk or two vote for a hike in the announcement tomorrow. In particular, UK has the Brexit transition deal in pocket already.
EUR/GBP is leading the way down as fall from 0.8976 resumes. It’s on course for a test on 0.8686 key support level. As this is a strong, important support zone, EUR/GBP could face some support there at initial attempt.
GBP/USD’s also jumps sharply after the release, indicating that retreat from 1.4087 is likely finished. The pair is also supported well above 4 hour 55 EMA. A test on 1.4087 would likely be seen soon.
