Unemployment Falls AgainThe British Pound is trading higher today on the back of a solid set of labour market indicators yesterday. The headline unemployment rate was seen falling back to 3.9%, its lowest level since the pandemic began. Marking an improvement on the prior quarter’s 4.1% reading and beating estimates for a 4% result, unemployment in the UK is now back to pre-pandemic levels, having peaked at 5.2% during the height of the pandemic.Claimant Count DropsThe claimant count change also showed a vast improvement. Following the prior quarter’s -67.3k reading, the market was looking for a 20.3k result, indicating a surplus in those claiming unemployment allowance. However, the indicator printed -48.1k, reflecting strong labour uptake yet again in the three months to January 2022.Earnings RiseFinally, the average earnings index was also seen improving over the period. The index rose to 4.8% from the prior and expected 4.6% reading. While still down from the almost 9% peak seen during the height of the pandemic, the indicator is trending upwards and remains above pre-pandemic levels.All Eyes on BOEIn all, the data shows there is ample room for the BOE to raise rates again when it meets tomorrow. Data has continued to improve in the UK as the economy continues to transition out of its pandemic state. With consumer optimism bouncing back as omicron risks fade further, the near-term outlook remains buoyant.Inflation Remains Key IssueInflation, however, is the biggest issue. Given the surge in energy prices over the end of last year, coupled with broad supply-side issues, inflation has been on the tear ever since. The outbreak of violence in Ukraine has intensified the situation, leading energy prices higher still. With inflation rising at a faster pace than pay packets, even the latest uptick in wage growth means that real incomes are falling as prices rise and are expected to continue to do so. While the BOE needs to hike rates to address spiralling inflation, there is a great deal of fear over the impact higher borrowing costs will have on lower economic households.Technical ViewsGBPUSDThe sell off in GBPUSD over recent weeks has seen the market falling from the channel top, around the 1.3676 mark, to the channel low, around the 1.3031 level. While price is holding here for now, bearish RSI and MACD readings suggest that further weakness is likely while price holds below the 1.3196 level.
Source: Tickmill
