Trading the News: U.K. Employment Change

A 120K expansion in U.K. Employment paired with a pickup in core household wages may spark a near-term rebound in GBP/USD as it puts pressure on the Bank of England (BoE) to start normalizing monetary policy.

Why Is This Event Important:

There appears to be a growing rift within in the BoE as Governor Mark Carney adopts a more hawkish tone and now warns ‘some removal of monetary stimulus is likely to become necessary.’ Signs of stronger job/wage growth may encourage the central bank to start normalizing monetary policy, but the majority of the Monetary Policy Committee (MPC) may merely try to buy more time at the next meeting on August 3 as officials argue ‘the projections that the Committee published in May showed that the economy was expected to operate with a small degree of spare capacity for most of the three-year forecast period, justifying the tolerance of some degree of above-target inflation.’

Impact that the U.K. Employment report has had on GBP/USD during the previous print

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

MAY

2017

06/14/2017 08:30:00 GMT

125K

109K

-17

-2

May 2017 U.K. Employment Change

GBP/USD 5-Minute

U.K. Employment increased 109K in April, while Jobless Claims climbed another 7.3K in May after increasing a revised 22.0K during the previous month. At the same time, Average Hourly Earnings excluding Bonuses slipped to an annualized 1.7% from a revised 1.8% in March to mark the slowest pace of growth since January 2015. The British Pound showed a lackluster reaction to the batch of mixed data prints, with GBP/USD largely consolidating throughout the day as the pair closed at 1.2751.