U.K. Jobless Rate and its Influence on the Pound

The British pound benefited from the information released by the Office for National Statistics (ONS). The GBP/USD maintains the upbeat momentum intact above 1.4000 amid mixed U.K. labor market report. Interestingly, the spot was last seen trading at 1.4003, up 0.15% on the day, courtesy of the merciless slide in the U.S. dollar.

The pound remains underpinned by the expectations of powerful U.K. economic indicators, the world’s one of the largest economies re-opened after three months of covid-induced lockdowns. Companies from the U.K. reported upbeat trading last week after three months of lockdowns. The unofficial data confirm forecasts of a robust rebound in the second quarter.

In several days after the reopening, visits to retail as well as entertainment venues jumped to within 24% of January 2020’s average levels. This result points to a sharper recovery than after the first lockdown. The consumer spending was up 10% compared with the same days of that week in 2019. During the same period of time, retail spending rose to 43% above the level of the same period in 2019.

Higher vaccination rates in the U.K. also remain sympathetic to the recent rally in the cable.

The U.K. Average Earnings released by ONS is an important short-term indicator of how levels of pay are changing with the country’s economy. Generally speaking, the positive earnings growth anticipates positive (or bullish) for the pound. Nevertheless, a low reading is seen as negative (or bearish).

Labor market and the pound

According to the Office of National Statistics, the U.K.’s official unemployment rate eased further to 4.9% in February. The jobless rate from February surpassed expectations as analysts expected a higher jobless rate.

Nonetheless, the claimant count change showed a minor rise in March. The number of people claiming unemployment benefits showed an increase of 10.1K in March when compared to +86.6K seen previously.

The U.K.’s average weekly earnings, without bonuses, arrived at +4.4% 3Mo/YoY in February versus +4.2% last and +4.2% expected. Meanwhile, the gauge including bonuses came in at +4.5% 3Mo/YoY in January versus +4.8% previous and +4.8 expected.

The latest figures suggest that the jobs market has been broadly stable in the last couple of months. After a few months of increases, there was an insignificant decrease in the number of payroll employees in March 2021. The number of job vacancies from January to March 2021 declined by nearly 23% on the year.