UK Unemployment, Sterling Analysis

• UK unemployment rate remains at 4.4%, data prints largely in line
• GBP/USD buoyed by stubborn services inflation, helped by recent USD decline
• The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library

UK Unemployment Rate Remains at 4.4%, Data Prints Largely in Line with Estimates

The overall takeaway from today’s jobs data is that there is nothing noteworthy to shift conversations when the Bank of England meets again on the 1st of August. The UK labour market has been easing for some time with May’s claimant data providing the only real shock when it was reported last month. The number of people applying for unemployment benefits shot up from 8.4k to 50.4k and was revised to 51.9k at the release of today’s updated data.

The statistics for June show that the number of people applying for income relief remains well above the trend. The unemployment rate, however, reveals that the labour market remains in a healthy state but nervousness around the claimant figures is likely to increase if the elevated numbers continue in the months ahead.

Pound Sterling Reaction

Sterling understandably remains little changed on the data that printed in line with expectations on most measures.

Sterling has benefitted from the recent rise in monthly services inflation which has helped to taper rate cut expectations and buoy the pound. In addition, better-than-expected inflation data in the US has flattered GBP/USD, seeing it reach the psychological 1.3000 marker.

GBP/USD bullish posture remains intact. With that being said, chasing longs from here does not present a constructive risk to reward setup, with a pullback offering a better potential entry in the direction of the trend, especially now that the pair trades within overbought territory around the psychological 1.3000 mark.

GBP/USD Daily Chart

Source: TradingView, prepared by Richard Snow

https://www.dailyfx.com/news/uk-unemployment-remains-at-4-4-as-jobs-data-reveals-no-surprises-20240718.html