Pound yawns as UK job data impress

The British pound is unchanged in the Tuesday session. Currently, GDP/USD is trading at 1.4065, up 0.01% on the day. Earlier, the pair touched a high of 1.4098, coming within a whisker of the 1.41 level for the first time since April 2018. The pound has made the most of the dollar’s weakness, having racked up gains of 2.8% in the month of February.

UK employment numbers sparkle

British employment numbers were much stronger than expected, although the pound’s gains have been muted on Tuesday. Claimant Count Change surprised with a drop of 20 thousand, as the street consensus stood at +13.8 thousand. Wage growth continues to move upwards. The Average Earnings index propelled to 4.7%, up sharply from 3.6% beforehand. Wages have now accelerated for a sixth straight month and easily beat the forecast of 4.1%. The unemployment rate ticked up from 5.0% to 5.1%, matching the estimate.

The rosy employment numbers come on the heels of a disappointing retail sales report. The December read came in at -8.2%, much weaker than the estimate of -3.0%. This sharp drop in consumers spending can be attributed to the lockdowns in place due to Covid, which has shut down much of the economy. As the vaccination programme continues, we can expect consumer spending to bounce back.

On Monday, Prime Minister Johnson laid out a stage-by-stage plan to reopen the economy, with a full restart of the economy expected in June. However, Johnson made clear that the relaxation of heath restrictions will be done cautiously and is contingent upon continued success in the battle against Covid. The PM said that the heavy restrictions in place could begin to be lifted due to the “extraordinary success” of the vaccine rollout.

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GBP/USD Technical

• GBP/USD tested resistance at 1.4084 earlier in the day. Above, there is resistance at 1.4163
• There is support at 1.3878. Below, we find support at 1.3751
• The 50-day moving average is situated at 1.3675

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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