The level of unemployment remains at record low levels: a jobless rate of 4.3% in September. What about wages? These rose by 2.2%, better than had been expected. In addition, the previous figure for August was revised up to 2.3%. In addition, the Claimant Count Change for October showed a very modest rise: 1.1K, better than 2K expected. All in all, Britain’s jobs report was quite positive. But where is the reaction?
GBP/USD is currently trading at 1.3150, basically unchanged for the day. The pound is losing ground to the yen and also the euro: EUR/GBP is topping 0.90.
Why? Yesterday’s figure was worse: it showed that inflation is going nowhere fast, perhaps making some BOE members regret their decision to raise the interest rate nearly two weeks ago.
But the deeper issue remains Brexit. The negotiations between the EU and the UK are going nowhere fast and many are preparing for a “hard Brexit” or falling off a cliff. The expectations are exacerbated by the infighting within the ruling Conservative Party. An open rebellion could bring Theresa May down, with no apparent successor and perhaps early elections.
GBP/USD faces resistance at 1.3180, followed by 1.3220. On the downside, the pair could find support around 1.3080 and 1.3030.
All these levels are within the well-known range. Yet the vulnerability of the pound could manifest itself to more serious drops.
