British Pound (GBP) Outlook and Forecasts Boosted as Unemployment Rate Falls to 6.9 pct
- Written by: Gary Howes
-
The pound sterling (GBP) has benefited from this week's busy UK economic. The most significant was the release of positive UK unemployment and pay growth figures which propelled the GBP exchange rate complex higher on Wednesday.
On Thursday morning we see that gains have been held overnight and the outlook remains bullish for today.
GBP surged higher following news that the UK unemployment rate has hit 6.9% - analysts had only expected a reading of 7.1%. With unemployment falling so fast markets are betting the Bank of England will be forced to bring forward their first interest rate rise.
On Thursday morning we are seeing the pound exchange rate complex located around about where it was at last night's close:
- Pound euro exchange rate:1.1965
- Pound dollar exchange rate: 1.2565
- Pound Australian dollar rate: 1.9434
- Pound Canadian dollar rate: 1.7694
- Pound New Zealand dollar rate: 2.1566
- Pound South African Rand rate: 22.8639
Note all quotes are reflective of the inter-bank market. Your bank or payment institution is free to levy a rate at their discretion. However, FCA-registered independent providers guarantee to undercut your bank's offer, thus delivering up to 5% more FX. Please learn more here
What does the outlook hold for the pound?
Today will ultimately be the most important day of the week data-wise for the currency.
At 09:30 the ONS release the ILO Unemployment Rate (3M) (Feb) which is predicted to come in at 7.1%, just shy of the Bank of England's target of 7%. Realised: 6.9%.
The Claimant Count Change (Mar) will arguably have a great impact on the pound sterling though, the number to look for is a fall of 30K people on unemployment benefits. Realised: -30.4K.
The Bank of England will be watching the rate of pay increases to see whether the capacity gap in the economy is coming down at a faster rate than anticipated. Average Earnings excluding Bonus (3Mo/Yr) (Feb) is predicted to come in at 1.7%. Realised: 1.4%
"If wage growth meets expectations, we could see a jump in sterling especially if the claimant count declines and the number of people filing for unemployment benefits drops by more than 35k," says Kathy Lien at BK Asset Management.
The technical forecasts for today
Regarding the pound dollar exchange rate forecast, UBS analyst Gareth Berry says:
"The pair has been correcting under the resistance at 1.6823. A break above this would open the way to 1.7043. Support is at 1.6640 ahead of 1.6556."
Regarding the euro pound rate Berry is bearish saying:
"With the trending indicators bearish, the risk is for rejection and resumption of weakness. Support is at 0.8231 ahead of 0.8158. Strong resistance should hold at 0.8336."
