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Prior 5.1%Employment change 52k vs 94k expectedPrior 82kAverage weekly earnings +4.2% vs +4.6% 3m/y expectedPrior +4.7% (revised to 4.6%)Average weekly earnings ex bonus +4.2% vs +4.2% 3m/y expectedPrior +4.5% (revised to 4.4%)January payrolls change -11kPrior -43k (revised to -6k)As a general reminder, the UK labour market report is still one plagued by data quality issues. And that looks set to continue further as outlined here: UK statistics office evaluates potential delay to its overhauled jobs survey – reportWe have softer than expected figures across the board here, but as mentioned earlier, the data is unlikely to change much for the BoE as it already projected more weakness and more rate cuts ahead. Today’s report should solidify expectations for a rate cut at the next meeting though. Traders were already pricing a 70% probability, so that will likely rise to 80% or even 90% when the market opens.MARKET REACTIONThe British pound dropped across the board as traders firm up expectations for an imminent rate cut. The market was pricing a total of 48 bps of easing by year-end which is likely to increase slightly after the employment data. If we see more weakness in the next months, we should see traders pricing in even more rate cuts than currently expected.
This article was written by Giuseppe Dellamotta at investinglive.com.
💡 DMK Insight
UK’s latest employment figures are a mixed bag, and here’s why that matters for traders: The employment change of 52k, falling short of the 94k expectation, signals potential weakness in the labor market. This could impact consumer spending and, by extension, economic growth. Average weekly earnings growth at 4.2% is also below expectations, indicating that wage pressures might be easing, which could influence the Bank of England’s monetary policy decisions. If the BoE perceives a slowdown in wage growth, it may reconsider its interest rate trajectory, which is crucial for forex traders, especially those trading GBP pairs. Keep an eye on the GBP/USD and EUR/GBP for potential volatility as traders digest this data. On the flip side, the revision of January payrolls to -11k from -43k suggests that the labor market isn’t as weak as initially thought, which could lend some support to the pound. However, the overall sentiment remains cautious. Watch for key levels around 1.2200 for GBP/USD; a break below could trigger further selling pressure, while a rebound could signal a buying opportunity if supported by other economic indicators.
📮 Takeaway
Monitor GBP/USD around 1.2200; a break below could lead to increased selling pressure amid mixed employment signals.
