The United Kingdom’s (UK) ILO unemployment rate held steady at 4.7% in the three months to July, according to data released on Tuesday by the Office for National Statistics (ONS). The reading was in line with market expectations.
ONS figures showed that jobless benefit claims rose by 17.4K in August, compared with a revised decline of 33.3K in July. Markets had anticipated a larger increase of 20.3K. Employment change stood at 232K in July, slightly down from June’s 239K.
Meanwhile, average earnings excluding bonuses rose by 4.8% on a three-month yearly basis (3M YoY) in July, easing from a 5% increase recorded previously. The figure matched consensus estimates. Including bonuses, average earnings grew 4.7%, compared with 4.6% in the prior quarter, also in line with expectations.
GBP/USD reaction to the UK jobs data
GBP/USD extended its gains after the release of the employment figures, trading 0.14% higher on the day at 1.3628, hovering near two-month highs.
UK labor market preview (published earlier at 04:04 GMT)
Ahead of the release, markets had anticipated a 20.3K rise in claimant count for August, following a 6.2K decline in July. The claimant count rate stood at 4.4% in the previous month.
Average earnings including bonuses were forecast to grow by 4.7% in the three months to July, up from 4.6%, while ex-bonus wages were expected at 4.8%, down slightly from 5.0%. The ILO unemployment rate was projected to remain unchanged at 4.7%.
Outlook for GBP/USD
While today’s jobs report provided modest support for the Pound, traders are likely to shift focus to Wednesday’s Consumer Price Index (CPI) and Retail Price Index releases. Market attention also centers on the Bank of England’s (BoE) policy decision on Thursday, where rates are expected to be held at 4%.
GBP/USD remains firm above the 1.3600 level, supported by a softer US Dollar (USD) amid expectations that the Federal Reserve (Fed) will cut interest rates by 25 basis points at its September meeting. Investors will also be monitoring US retail sales data due later today.
From a technical perspective, the pair could test initial resistance at 1.3788, its highest level since October 2021. On the downside, immediate support is seen at the nine-day Exponential Moving Average (EMA) of 1.3555, followed by the 50-day EMA at 1.3485.
