British Pound Live on Wednesday the 12th: GBP surges as UK employment data is a beat on estimates

Highlights:
@12:42: BMO warn of modest GBP depreciation over the next 12 months
@9:30: UK employment data sends GBP higher

16:40: GBP to revert to technical considerations on Thursday the 12th

Today's labour market statistics offered upside to the UK currency; however the remainder of this week sees little economic data events of note.

Thus, we are expecting technical considerations as well as broader foreign exchange market moves to dictate direction in sterling tomorrow. The momentum behind GBP is decidedly positive at present and this should keep the currency well supported.

15:20: GBP-USD eyes 1.57

Boris Schlossberg says GBP/USD is closing in on a key level in light of today's good labour market data.

"The UK data has been consistently better than consensus suggesting that growth in Q2 is likely to see substantial improvement. This has translated into much better performance for the pound which is now within striking distance of the 1.5700 level."

15:00: Expect the UK pound to continue finding support

Commonwealth Foreign Exchange Inc tell us the British pound is currently well supported:

"The pound rose back toward its highest level since mid February against the greenback, broadly supported by data showing a drop in the number of Britons claiming unemployment benefits.

"The U.K.’s claimant count fell by 8,600 in May, which was slightly better than the forecast for a drop of 5,000. It was the latest in a growing list of economic reports that have highlighted a surprising improvement in the U.K. economy and have lowered the risk of additional Bank of England monetary easing. More data that shows the U.K. economy has bottomed should continue to support the pound."

12:42: Dreaming of a sky-high pound? Dream on…

The outlook for the British pound is tipped to remain challenging in coming months warns Stephen Gallo, European Head of FX Strategy at BMO Capital Markets:

"Despite the perceptions of structural success for the UK over the last decade or more, the economy’s over-reliance on the financial services sector, its public and private sector debt burdens, household deleveraging, its balance of payments deficit and policy complications stemming from its floating nominal exchange rate all suggest that a lot can still go wrong.

"We believe that the balance of factors will lead to a modest GBP depreciation over the next year, whilst stale short positioning and a reigniting of credit channels and asset appreciation should remain important upside risks.

"Additional BoE QE injections still for now appear to be a more distant, last-resort option for policy makers given the BoE’s new powers."

Also - see our latest note on the pound's outlook from Lloyds Bank Research.

11:35: Today's pay data is what is getting the economists excited

The CBI has reacted to today's great job numbers which showed employment rose by 24,000 and unemployment fell by 5,000 in the three months to April, and total pay rose by 1.3 pct.

Neil Carberry, CBI Director for Employment and Skills, said:

"It’s encouraging to see businesses feel able to pay people a little more through one-off bonuses, as economic conditions appear to have brightened. The use of bonuses rather than base pay awards suggests firms are still being cautious.

"The labour market always lags a few months behind the economy, so it’s not surprising that overall, the picture on unemployment remains fairly flat.

“However, we expect to see improving economic conditions making a more positive impact on job creation later this year and it’s encouraging that once again the private sector more than offset the number of positions lost in the public sector during the first quarter.”

9:50: Details of the good employment figures and latest rates

The British pound has risen across the board in the wake of today's employment figures - see the figures here.

The GBP/EUR is now 0.36 pct higher at 1.1795.
The GBP/USD is 0.22 pct higher at 1.5680.

Please be aware that the above quotes are wholesale - your bank will affix their own discretionary spread. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here. 

9:33: UK employment data is a beat

"GBPUSD surges on the back of better than expected labour market data in the UK  (esp. wage data), however 1.5705 still Short Term top" - say Forex.com in the wake of the just breaking news concerning the UK's employment situation.

8:50: Latest spot rates

The British pound sterling (Currency:GBP) is strong against the USD and EUR, but a well-overdue correction against the Australian dollar and commodity currencies is under way:

8:40: Ahead we have jobs data

The big economic announcement will be the employment figures due from the ONS at 9:30 today. The key number will be the claimant count; see what the forecasts for the claimant count are here.