GBP Brushes Off Job Data, Dollar Declines Versus Yen and Franc

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Today, GBP pays little regard to employment data, which has shown modest signs of improvement. The dollar is significantly weaker against the Swiss Franc and the Japanese Yen, but markets are pretty stable elsewhere.  The Canadian dollar likewise shrugged off the Bank of Canada’s tapering announcement from yesterday. For the next changes in currencies, the general focus will shift to US job data and stock market movements.

According to the Office for National Statistics (ONS), the UK’s official unemployment rate rose to 4.8 percent in May, up from 4.7 percent in April and 4.7 percent projected, although the claimant count change showed a huge decline last month.

The number of people receiving unemployment benefits fell by 114.8K in June, compared to -92.6K the previous month. The claimant count rate was 5.8%, down from 6.2 percent the previous year. In May, the UK’s average weekly earnings, without bonuses, reached +6.6 percent 3Mo/YoY, compared to +5.7 percent the previous month and +6.6 percent predicted, while the gauge including bonuses was +7.3 percent 3Mo/YoY in March, compared to +5.7 percent the previous month and +7.2 percent anticipated.

GBP Struggles To Keep Its Ground Against the Dollar’s Surge

GBP is trading below the 1.3850 price zone, down from recent highs reached after BOE Governor Saunders advocated for reducing short-term economic support. The dollar appreciates as rates fall and markets recover from recent lows.

In the GBP/USD, range trading continues, and the intraday bias remains neutral for the time being. On the downside, a break of 1.3730 will resume the decline from 1.4248, as the third leg of the consolidation pattern from 1.4240, to 1.3668 support and maybe lower levels. On the upside, a breach of 1.4000 will revert the bias to the upward, allowing for a retesting of the 1.4240/8 resistance zone.

Cable has completely reversed the gains made as a result of Bank of England member Michael Saunders’ hawkish remarks. In opposition to Governor Andrew Bailey, Saunders advocated for ending the BOE’s bond-buying program and eventually boosting interest rates. His comments come after the UK announced a 7.3 percent YoY pay increase in May, which could lead to inflationary pressures in the future.