The number of people filing for unemployment benefits in Britain dropped unexpectedly in the seventh month of the year, official data revealed on Wednesday. According to the Office for National Statistics (ONS), claims for state unemployment benefits slipped 8,600 in July, whereas the preceding month's gain was revised up to 900 from the initially reported increase of 400. Market analysts pencilled in a rise of 5,200 in the reported month. In the meantime, the UK unemployment rate came in at 4.9% in three month to June, in line with the previous month's figure and analysts' expectations. Furthermore, average weekly earnings rose 2.4% including bonuses in June, surpassing last month's 2.3% increase, but missing the 2.5% market forecast. Excluding bonuses, weekly earnings grew 2.3% in the same month, while markets anticipated the reading to remain unchanged at 2.2% in June. Once the report was released, the British Pound jumped against the Euro, but gave up all those gains shortly.
The data provided showed that the labour market remained strong on the eve of the Brexit referendum. The Bank of England forecasts unemployment to rise markedly within the next couple of years amid the country's decision to leave the European Union. At its latest meeting in August, the central bank cut its key interest rates by 25 basis points to a record low of 0.25%.
UK Retail Sales, US Jobless Claims and Philadelphia Fed Manufacturing Index
GBP/USD in limbo between 1.30 and 1.31
Wednesday ended with the Pound remaining relatively unchanged against the US Dollar. The inability to close significantly lower creates a possibility for the Cable to post more gains this week if sufficient impetus is provided. The GBP/USD currency pair has the potential to climb over the 1.31 major level today, as supply there, represented by the 20-day SMA, is unlikely to prevent the exchange rate from edging higher. On the other hand, technical indicators keep giving bearish signals, suggesting that a decline back under 1.30 could take place, with the weekly PP at 1.2975 acting as the nearest support.
Daily chart
Hourly chart
Still no consensus
The portion of bulls slightly increased over the day, having risen from 58 to 59%. At the same time, the number of orders to sell the Sterling inched up from 46 to 61%.
Indecision appears to be widespread, as the same neutral sentiment is observed among the traders of other brokers. At OANDA, 62% of positions are long and 38% are short. The sentiment at Saxo Bank is now less bullish than before, as the numbers of longs and shorts each take up 53% and 47% of the market, respectively.
Spreads (avg, pip) / Trading volume / Volatility
Majority sees the GBP/USD below 1.30 in three months
Exactly half of traders (53%) believe the British currency is to cost 1.30 or less dollars after a three-month period. The most popular price interval, however, was selected by 16% of the voters, namely the 1.24-1.26, while the second most popular choice implies that the Sterling is to cost between 1.34 and 1.36 dollars in three months, chosen by 13% of the surveyed. At the same time, the mean forecast for Nov 18 is 1.3081.