UK jobs report preview: GBP/USD set to react to figures that go with the Brexit mood

  • The UK labor market is expected to remain once again.
  • Top-tier economic data has been unable to keep up with Brexit developments.
  • GBP/USD's reaction depends on the mood around Brexit talks.

Finding a job in the UK is more accessible than in the past and pay is rising – but that does not move the pound these days. The employment report is scheduled two days ahead of the critical EU Summit and 16 ahead of Brexit Day. 

GBP/USD volatility has markedly risen – and that is good news for pound traders, who are looking for opportunities. Reactions to economic figures are unlikely to remain meager. However, volatility has risen due to Brexit, and headlines related to the UK's exit from the EU will also determine the magnitude of the move.

Wages in focus

Economists expect the Unemployment Rate for August to remain at the historic lows around 3.8% seen in July. More importantly, Average Earnings carry expectations for a deceleration – but to stay at high levels well above the inflation rate of 1.7% recorded in August.

With unemployment standing at historically low levels for a long time, economists expect salaries to rise. Higher pay may translation into higher inflation – causing the Bank of England to raise interest rates. In turn, higher rates push the currency higher. In case wage growth declines, so do expectations for inflation and higher rates – and the pound may follow. 

Including bonuses, wage growth is projected to slow from 4% to 3.9%. Excluding bonuses – which is a better measure of salaries – a drop from 3.8% to 3.7% is on the cards. 

Overall, wage growth has returned to pre-crisis levels:

UK wage growth is on the rise 2008 2019

The change in earnings, excluding bonuses, is the most significant figure, yet a deviation of 0.1% from early projections would also be considered within expectations. An increase of 3.9% or more would be pound-positive, while a deceleration to 3.6% or below would weigh on sterling. 

Should this figure come out within expectations, wages, including bonuses and the jobless rate, may come into play, but they may have a more muted impact on the pound.

Dependency on Brexit headlines

However, as mentioned earlier, the response depends on the market mood. An upbeat advance in pay will likely have a more significant positive effect if the UK and the EU are closer to a deal, and GBP/USD already enjoys an uptrend. If headlines are pessimistic, sterling may be unable to benefit from upbeat economic developments.

The same goes for a disappointing outcome. A substantial slowdown in wage growth may exacerbate cable's fall if headlines are pessimistic. However, if the market believes that a Brexit deal that can pass parliament is imminent – sterling will likely shrug off weak data.


The UK jobs report is a top-tier indicator that is set to move the pound. The reaction depends on the surprise going with the trend – and the direction depends on Brexit.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Analysis feed

Latest Forex Analysis

Editors’ Picks

Dollar in trouble, EUR/USD recovers the 1.1000 level

The American currency came under selling pressure, although the EUR/USD pair is a laggard, barely above the 1.1000 figure. Trump´s impeachment process seems to be behind the latest slide.


GBP/USD approaches 1.2900 as the greenback eases

The GBP/USD pair is at fresh weekly highs in the 1.2880 region, as speculative interest moved away from the dollar, and in spite of poor UK data.


USD/JPY slumps to fresh 10-day lows near 108.30 on falling US T-bond yields

The USD/JPY pair came under renewed bearish pressure during the American tracing hours and slumped to its lowest level in ten days at 108.25 as the dismal market mood allowed the JPY to continue to gather strength against its rivals as a safe haven.


US Dollar Index: DXY suck at monthly highs near 98.40 level

DXY (US Dollar Index) is trading in a bull trend above the main daily simple moving averages (DMAs). This Thursday the Greenback is once again challenging the 98.40 level while trading just above the 50 DMA.

US Dollar Index News

Gold: the $1,470 regions caps the upside

Prices of the precious metal keep the positive performance in the second half of the week, although the $1,470 region continues to cap the upside for the time being.

Gold News

Forex Majors