The unemployment rate in the UK fell to its lowest level in more than a decade in May, a sign the labor market continued to strengthen in the run-up to Britain's referendum on membership of the European Union, while average weekly earnings edged up in the same month. The unemployment rate in the UK came in at 4.9% in the fifth month of the year, unaffected by the Brexit fears before the referendum. The unemployment rate in the UK measured on a three months moving average basis, therefore, fell below the level of the natural, or non-inflationary, unemployment level of 5.0% estimated by the Bank of England. Meanwhile, the number of people in work rose to another record high, reaching 31.7 million. Initial jobless claims showed slightly worsening labor market conditions in the UK during the Brexit month, as the index revealed 400 new people claimed unemployment benefits in June. In the meantime, a separate report showed that the claimant count ticked up by 400 between May and June, but more strikingly, the April-May rise was revised up to 12,200 from an originally reported fall of 400.
The Office for National Statistics also reported that average weekly earnings registered a rise of 2.2% excluding bonuses in May, while the indicator advanced 2.3% including bonuses in the same month.
UK Retail Sales to be the main Cable driver today
GBP/USD anchored around 1.32
Strong UK employment figures caused the Sterling to outperform the US Dollar on Wednesday, but with the pair still failing to fully negate Tuesday's losses. Today the Cable opened on top of a relatively strong support cluster, represented by the 20-day SMA and the weekly PP, which should prevent the Pound from falling down again. However, technical indicators retain bearish signals, suggesting that another decline towards the 1.31 mark is possible. On the other hand, in case bulls take over the market, gains are unlikely to exceed the 1.3350 level, despite the nearest resistance located only around 1.3540.
Daily chart
Hourly chart
Bulls remain in control
Once again 57% of traders have a positive outlook towards the Sterling (previously 56%), while the number of sell orders increased further, having risen from 61 to 69% over the day.
Compared to Friday, there are slightly less bulls at OANDA - they take up 54% of the positions open with the Canada-based broker. Sentiment at Saxo Bank weakened further, as here the number of bears exceeds the number of bulls by 4 percentage points.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees GBP/USD below 1.36 in three months
More than half of traders (59%) believe the British currency is to cost 1.36 or less dollars after a three-month period. The most popular price intervals was selected by only 18% of the voters, namely the 1.28-1.30 one, while the second most popular choice implies that the Sterling is to cost between 1.24 and 1.26 dollars in three months, chosen by 15% of the surveyed. At the same time, the mean forecast for Oct 21 is 1.3369.