Breaking: UK Unemployment Rate stays at 4.7% in the quarter to July as expected
- The UK Unemployment Rate held steady at 4.7% in three months to July.
- The Claimant Count Change for Britain came in at 17.4K in August.
- GBP/USD sits at two-month highs above 1.3600 after UK employment data.
The United Kingdom’s (UK) ILO Unemployment remained at 4.7% in the three months to July, data published by the Office for National Statistics (ONS) showed on Tuesday.
The data aligned with the market expectations.
Additional details of the report showed that the number of people claiming jobless benefits rose 17.4K in August, compared with a revised drop of 33.3K in July, bettering the expected 20.3K print.
The Employment Change data arrived at 232K in July versus 239K in June.
Meanwhile, Average Earnings, excluding Bonus, in the UK edged higher by 4.8% three months year-over-year (3M YoY) in July versus a 5% growth booked previously. The market consensus was for a 4.8% reading.
Another measure of wage inflation, Average Earnings, including Bonus, increased by 4.7% in the same period after accelerating by 4.6% in the quarter through June. The data matched the estimate of 4.7%.
GBP/USD reaction to the UK employment report
GBP/USD holds its upside following the release of the UK employment data. The pair is trading 0.14% higher on the day near two-month highs of 1.3628, as of writing.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.19% | -0.21% | -0.06% | -0.00% | 0.06% | -0.16% | |
| EUR | 0.16% | -0.02% | -0.17% | 0.10% | 0.21% | 0.21% | 0.00% | |
| GBP | 0.19% | 0.02% | -0.12% | 0.12% | 0.24% | 0.24% | 0.02% | |
| JPY | 0.21% | 0.17% | 0.12% | 0.23% | 0.28% | 0.10% | 0.11% | |
| CAD | 0.06% | -0.10% | -0.12% | -0.23% | 0.05% | 0.07% | -0.10% | |
| AUD | 0.00% | -0.21% | -0.24% | -0.28% | -0.05% | 0.08% | -0.20% | |
| NZD | -0.06% | -0.21% | -0.24% | -0.10% | -0.07% | -0.08% | -0.16% | |
| CHF | 0.16% | -0.01% | -0.02% | -0.11% | 0.10% | 0.20% | 0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The section below was published at 04:04 GMT as a preview of the UK labor market report.
UK Jobs Report Overview
The United Kingdom (UK) docket has the labor market report to be released by the Office for National Statistics (ONS) on Tuesday, later this session at 06:00 GMT.
UK Claimant Count Change for August is expected to rise by 20.3K, reflecting the number of people claiming jobless benefits. The reading was -6.2K in July. Meanwhile, the Claimant Count Rate was at 4.4% in the previous month.
UK Average Earnings, including bonuses, in the three months to July, are expected to accelerate by 4.7%, following 4.6% prior, while ex-bonuses, the wages are expected to rise by 4.8% against the previous 5.0%.
UK ILO Unemployment Rate (3M) may remain consistent at 4.7% in the three months to July.
How could the UK Jobs Report affect GBP/USD?
The UK jobs report may take a backseat as traders shift focus to Wednesday’s Consumer Price Index (CPI) and Retail Price Index releases. The Pound Sterling (GBP) draws support against its peers from cautious sentiment surrounding the Bank of England (BoE) to hold interest rates steady at 4% in the monetary policy meeting on Thursday.
The GBP/USD pair remains stronger above 1.3600 as the US Dollar (USD) weakens due to the firm likelihood of the US Federal Reserve (Fed) lowering rates by 25 basis points at its September meeting due on Wednesday. Traders will likely be watching the US Retail Sales for August on Tuesday.
Technically, the GBP/USD pair may appreciate toward its initial barrier at 1.3788, the highest since October 2021. On the downside, the primary support lies at the nine-day Exponential Moving Average (EMA) of 1.3555, followed by the 50-day EMA at 1.3485.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
