– U.K. Jobless Claims to Contract for Fourth Consecutive Month.
– Average Weekly Earnings ex. Bonus to Climb to Annualized 2.1%- Highest Since September.
Trading the News: U.K. Jobless Claims Change
Another 9.1K decline in U.K. Jobless Claims paired with signs of stronger wage growth may heighten the appeal of the British Pound and spur a near-term advance in GBP/USD as it puts increased pressure on the Bank of England (BoE) to normalize monetary policy sooner rather than later.
What’s Expected:
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Why Is This Event Important:
Even though the EU referendum clouds the economic outlook for the U.K., a further improvement in labor-market dynamics may spur a split within the Bank of England (BoE) as central bank officials remain upbeat on the economy and see a risk of overshooting the 2% inflation-target over the policy horizon.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Visible Trade Balance (JAN)
-10.300B
-10.289B
Manufacturing Production (MoM) (JAN)
0.2%
0.7%
Retail Sales ex. Auto Fuel (MoM) (JAN)
0.7%
2.3%
Improved demand from home and abroad may encourage U.K. firms to ramp up their labor force, and a marked pickup in job/wage growth may spark a near-term advance in Cable as it boosts interest-rate expectations.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
Markit Purchasing Manager Index- Services (FEB)
55.1
52.7
GfK Consumer Confidence (FEB)
3
0
Lloyds Business Barometer (FEB)
—
28
Nevertheless, waning confidence along with the slowdown in service-based activity may drag on employment, and a dismal labor report may produce near-term headwinds for the sterling as it market participants push out bets for a BoE rate-hike.
