UK jobs preview: Jobless claims may provide signs of the coronavirus impact, shape pound-positioning

The UK's unemployment rate and wage figures for January are now stale in fast-moving markets.
Claimant Count Change numbers for February are already more up-to-date statistics that may move the pound.
The figures may impact the pound toward the next shocks.

Yohay Elam FXStreet

Data-driven decisions – always good practice for traders and for in general. However, the rapid pace of market movements – alongside coronavirus' spread – makes almost every economic data stale at the moment it is compiled.

Nevertheless, some figures are fresher than others and they can impact positioning ahead of the next virus headlines.

Expectations

UK labor data ahead of March 17 2020 releases.png

In the upcoming UK jobs report, the Claimant Count Change, or jobless claims, are for February. Economists are relatively pessimistic. After the number of the new unemployed rose by a modest 5,500 people in January, a more substantial increase of 21,400 is on the cards.

If claims advance at a faster pace, it may indicate that the respiratory disease already has a detrimental impact on the British economy. Conversely, if the figure is closer to last month's rise or even records a drop, it would indicate the UK labor market was doing well before the outbreak.

As mentioned earlier, the most recent headlines may have a greater impact on the pound, but when the dust settles, it could impact the positioning of sterling toward the next moves.

Before the crisis, wages had the most significant influence on the pound, and they are of interest as well, even though they refer to January. After dipping in December, Average Hourly Earnings including bonuses are set to accelerate from 2.9% to 3%. Excluding extra pay, the pace is set to remain unchanged at 3.2%.

The Unemployment Rate, which is calculated on a three-month basis, is unlikely to budge from the historic low of 3.8% and changes are unlikely.

Pound positioning

GBP/USD has been mostly moving on mood changes related to the US dollar. Demand for the safe-haven greenback has sent cable tumbling down, regardless of the economic situation in the UK. Financial distress overwhelmed all other factors and signs of relief sent the currency pair higher.

The data can impact the next wave. In the next stock market crash, GBP/USD would be able to weather some of the dollars storms while weak data would make it more vulnerable. Upon a relief rally, the rise has the potential to be more significant if British statistics are upbeat, while downbeat data may flatten the pound's curve.

Conclusion

While the rapid spread of coronavirus dominates headlines, UK data – and especially more recent figures – may impact the pound.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.