Moments ago the Office of National Statistics reported that the UK jobless rate declined to 7.7% for the period between May – July which is the lowest reading since September – November of 2012 and down 0.1% from July’s 7.8% figure. A total of 2.487 million remain unemployed in the UK which is down 24,000 while continued claims dropped 32,600 in August which marks the biggest decline since July 1997.
Average weekly earnings increased by 1.1% which is below the 2.8% inflation rate. The unemployment rate has started to play a much bigger role as the Bank of England under Governor Carney stated that interest rates as well as stimulus will remain in place until the jobless rate drops below 7.0% after which point they will re-evaluate the situation.
Market participants believe that the Bank of England will raise rates prior to that and the GBP surged with the GBPUSD currency pair briefly breaking above 1.5800 before reversing the spike which was caused after the unemployment report was released.
The GBPUSD is overstretched and should correct from current levels, but form a higher low which will keep the general uptrend intact. A correction in this currency pair should be limited to the 1.5550 level from which it may launch another run towards the 1.6000 level.
The EURGBP has breached below the 0.8400 level which is a good entry level for long positions as this currency pair should rally back above the 0.8500 mark before attempting to correct further down to the 0.8200 level.
Written by Paxforex