Claimant Count Change, the fresh employment indicator, has shown a rise of 0.7K in the number of people claiming unemployment benefits in Britain in March. Early expectations stood on a drop of 3.6K. On the other hand, the unemployment rate for February remained dropped from 8% to 7.8%. It was expected to remain unchanged at 8%. GBP/USD is sliding lower.
This rise in the number of people claiming unemployment benefits comes on top of a downwards revision in the the drop reported last month – from 10.2 to 8.5K. The related Average Earnings Index, which also provides an insight about the relation between jobs and prices, is now rising at a pace of 2%, weaker than 2.6% that was expected. This eases inflationary pressures.
Mervyn King, the governor of the BOE, and most of the other members, are reluctant to raise the interest rate in Britain, because of the fragile situation of the British economy. Employment is still very weak and so are retail sales. The unofficial BRC retail sales indicator plunged, showing that British consumers aren’t confident at all.
GBP/USD now trades at 1.6270, slightly lower from 1.6285 before the release.
Yesterday, inflation figures were weaker than expected. The headline CPI figure showed a price rise pace of 4%, significantly weaker than 4.4% that was expected. Also other inflation figures were weaker than expected. This took its toll on the pound which made sharp fall and went as low as 1.6227.
In the meantime, it managed to recover, and rise up to the resistance line of 1.63. It bounced from there to 1.6280 before the release of the employment figures.
Levels to watch on the upside are 1.64 and 1.6450. On the downside, we have 1.6110 and 1.60. For more technical levels, analysis and upcoming events, see the GBP USD Forecast.
Source: Forex Crunch
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