UK labor market report overview
The UK Office for National Statistics (ONS) will publish its labor market report at 07.00 GMT. The UK ILO Unemployment Rate is expected to rise to 5.1% in October from 5.0% in September. Employment Change arrived at -22K in September.
The UK Claimant Count Change for November is projected to increase by 22.3K, reflecting the number of people claiming jobless benefits. The reading was 29K in October. Meanwhile, the Claimant Count Rate was at 4.4% in the previous month.
Meanwhile, UK Average Earnings, including bonuses, in the three months to October, are estimated to accelerate by 4.4%, following 4.8% prior, while ex-bonuses, the wages are forecast to rise by 4.5% against the previous 4.6%.
How could the UK labor market report affect GBP/USD?
GBP/USD trades in negative territory on the day in the lead up to the UK labor market data. The pair loses ground as traders turn cautious ahead of the key US economic data, including Nonfarm Payrolls (NFP), Retail Sales, and Purchasing Managers Index (PMI), which will be released later on Tuesday.
If data comes in better than expected, it could lift the Pound Sterling (GBP), with the first upside barrier seen at the 1.3400 psychological level. The next resistance level emerges at the December 11 high of 1.3438, en route to the October 17 high of 1.3471.
To the downside, the 100-day Exponential Moving Average (EMA) of 1.3330 will offer some comfort to buyers. Extended losses could see a drop to the December 9 low of 1.3287. The next contention level is located at the December 3 low of 1.3202.
Economic Indicator
ILO Unemployment Rate (3M)
The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.
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Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
Source: https://www.fxstreet.com/news/when-is-the-uk-labor-market-report-and-how-could-it-affect-gbp-usd-202512160447
