The recent data on the UK labor market has made market participants puzzled again. In fact, there are more questions than answers. The unemployment rate remained the same. However, the number of unemployment claims dropped pointing to positive dynamic. In other words, the figures are really controversial. A decline in the number of unemployment claims can be explained by the fact that a period of massive layoffs and numerous requests sent to employment services has already passed. However, the UK unemployment figures have caused a lot of discussions. The fact is that the number of employed people dropped by 126 thousand. Thus, a stable unemployment rate looks quite suspicious. Moreover, market participants suppose that the UK statistical data does not reflect the real situation. All this has a negative impact on the pound sterling.
The UK average earnings grew by 0.7% compared to a rise of 1.7% in the previous month. At the same time, earnings including bonuses stopped advancing and even declined by 0.3% on a yearly basis. Nevertheless, the data beat the forecast.
In fact, the ECB’s meeting is the main event of the day. However, markets are likely to ignore it. Analysts do not expect any changes. Christine Lagarde will hardly say anything new at the press conference. As a rule, President of the ECB emphasizes the necessity to monitor the current situation and take measures in case of emergency. Such predictions are based on the inflation report that showed that the indicator has stopped falling. However, the final report will be published tomorrow.
Thus, market participants will take into account only the US macroeconomic data that is expected to boost the US dollar. According to the forecast, the number of the first-time and continuous unemployment claims may go on sliding. Of course, the general number of claims is still extremely big, but the current dynamic points to the labor market revival. Moreover, consumer activity is also improving. The US retail sales are expected to drop just by 3.0%. In other words, the US economy is getting back on track.
According to the technical analysis, the euro/dollar pair hit an important level of 1.1450 after a jump. After that, the number of long positions significantly declined leading to the pair’s reversal.
If the price continues sliding, it may hit the levels of 1.1350-1.1300.
According to the alternative scenario, the pair may consolidate above 1.1450.
Today, the pound/dollar pair showed quite a tepid activity after reaching the level of 1.2620. It is possible that the area of 1.2480/1.2500 is the main target. Earlier, it acted as support.
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