The Pound advanced slightly on Tuesday, supported by the latest data from the country. At the time of writing, the GBP/JPY cross was up 0.30%, trading near 150.40.
UK labor market stays strong
Earlier today, the Office for National Statistics (ONS) informed that the 3Mo unemployment rate improved a notch to 4.2% in October, down from 4.3% previously. In November, the claimant count change dropped to -49,800 from -14,900 in October. The number of people jobless and seeking work dropped by 127,000 to 1.423 million in the three months to the end of October.
The UK’s average weekly earnings, excluding bonuses, arrived at 4.3% 3Mo/YoY in October versus +5.0% last and +4.0% expected. The gauge, including bonuses, came in at 4.9% 3Mo/YoY in October versus +5.9% previous and +4.5% expected.
Darren Morgan, the ONS’s economic statistics director, said.
The numbers suggest the labor market remained strong despite the withdrawal of government support to cover the wages of workers temporarily told not to report for work. Some economists had feared a surge in unemployment as government support measures ended.
The Pound ticked higher after the data. However, buying seems limited heading into this week’s Bank of England policy meeting. Despite soaring inflation, the Bank of England is now expected to stay pat and not raise rates. A couple of weeks ago, the broad consensus was for the BoE to raise interest rates. However, that changed quickly as the Omicron variant spread in the UK, prompting the government to re-start tightening measures. Only two of nine MPC members are currently seen voting for a rate hike.
Later today, the US PPI indices are due, expected to continue rising. The yearly change will likely soar to 9.2%, up from 8.6% previously, while the monthly change is expected to stay unchanged at 0.6%. The core PPI index is seen rising to 7.2% year-on-year, up from 6.8% in October.
Sterling defends significant support
It looks like the bulls have managed to defend the crucial horizontal support at around 149.20. As long as the Pound trades above it, the medium-term trend still appears bullish. The next target in the bullish wave will be at the 200-day moving average near 152.50. The MACD indicator is about to send a bullish signal on the daily chart, reinforcing the bullish narrative.
However, if the support is broken to the downside, significant stop losses could be hit, likely dragging the Pound further lower to 147, representing fresh ten-month lows for the Pound.