Investors are again puzzled by the UK labor market data. It is the main reason for the British pound’s depreciation that began just after the publication of the report. In April, the UK unemployment rate remained unchanged. This is the main issue that worries investors. The fact is that in the same month, the number of unemployment claims was upwardly revised to 1 million 032 thousand from 856.5 thousand. Thus, in April, the indicator hit the record high. At the same time, the unemployment rate did not change. This mismatch fears market participants most of all as in following month, the figures could be downwardly revised. At the same time, in May, the UK claimant count figures were significantly below the forecast. The number of claims jumped by 528,900 while economists had expected a rise of 330 thousand. Of course, stability of the unemployment rate is under question. Analysts suppose that it should have advanced. Moreover, the UK average earning index showed rather weak data. Thus, the indicator’s rise slowed down to 1.7% from 2.7%. Economists had predicted an increase of 1.9%. In other words, the number of unemployed people is soaring whereas earnings are dropping.
However, the British pound and the euro are gaining momentum amid the US statistical data. Today, the most important event is the publication of the US retail sales figures. According to the forecast, retail sales declined more than in the previous period. The current reading is the lowest since the early 1990s. Thus, a decrease in the consumer activity is really alarming. The fact is that consumer activity is the main driver of the US economy. Moreover, the US services sector accounts for about 80% of GDP and retail sales is the key barometer of the whole sector.
Notably, the services sector has a direct influence on other sectors. Thus, the US industrial production is also expected to fall to the lowest levels since 2009. In other words, the situation can be compared only with the Great Depression. The pound sterling and the single currency may increase amid the news.
According to the chart, the euro/dollar pair slowed down within the levels of 1.1320 and 1.1355. There, the quote is trying to stabilize after the recent surge in activity. In fact, market participants returned to the last week’s range. It means that the upward trend is still in force.
Sell positions could be opened below 1.1320 with the targeted level at 1.1300.
Buy deals could be initiated above 1.1360 with the target at 1.1400.
At the same time, the pound/dollar pair moved away from the level of 1.2620, slowed down and formed the range of 1.2620/1.2670. The mentioned range is a short-term phenomenon as there are still speculative interests in the market.
The price may resume yesterday’s trend, if it consolidates above 1.2690. According to the alternative scenario, the pair may hover within the mentioned range. After that, it may consolidate below 1.2600 with the target at 1.2500.
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