This morning, sterling rallied in the wake of a Bloomberg report, saying that the EU won’t authorize Brexit negotiations until June 20th, despite clear communication from the UK government over the last six months that it will invoke Article 50 by the end of March (repeated by a PM spokesperson earlier in this week). The pound showed an average 0.4% gain versus the G3 currencies as London interbank participants take to their positions. Cable clocked a nine-day high at 1.2258 earlier, which was well up on the 1.2109 eight-week low of yesterday.
Additionally today, UK unemployment data unexpected fell to 4.7%, a new cycle low in official ILO data for January. The median expectation had been for an unchanged 4.8% reading. The soon-to-be discontinued measure on jobless claims in February fell 11.3k, and the claimant count rate remained at 2.1%, which is also the cycle low. Average earnings data were disappointed, with the ex-bonus average household income ebbing to a growth rate of 2.2% y/y in the three months to January, down from 2.6%, and the with-bonus figure falling to 2.3% from 2.6% previously.Sterling took a tumble on the back of the soft pay numbers, which comes with inflation rising and adds to signs that consumer-driven economic growth is in stagnation. This in turns raises the possibility for BoE guidance to take a dovish turn at tomorrow’s post-March meeting announcement.
In the announcement of UK labour data, Cable settles back in the 1.21s levels, by breaking 50 period MA and 200 period EMA, in the hourly chart. The 1 hour GBPUSD chart however remains bulling, since Monday with positive Parabolic SAR, and MACD moving neutrally since its turn earlier today. In 4-hour chart, pair manage to broke the 50-period moving average twice today, firstly upwards and now downwards. RSI is neutral but is pointing downwards. Even though Cable today seems to run out of steam, its performance onwards depends mainly in US data and Fed’s meeting later on.
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