The Pound intends to rise. Overview for 19.05.2020
On Tuesday afternoon, GBPUSD is trying to keep the positive momentum that started yesterday.
The British Pound is growing against the USD on Tuesday. The current quote for the instrument is 1.2242.
In the morning, the United Kingdom published a series of reports on the labor market, which turned out to be pretty interesting. For a start, the Unemployment Rate in the country was only 3.9% in March, which is better than the February reading of 4.0% and much better than market expectations of 4.4%.
The Average Earnings Index added only 2.4% 3m/y after expanding by 2.8% 3m/y over the previous period and against the expected reading of +2.7% 3m/y. It’s quite logical that the labor market might have predicted economic woes during the quarantine period and, as a result, decided to hurl all effort into keeping as many jobs as possible instead of increasing salaries. It’s not only logical but also very farsightedly.
And then comes the worst part. The April Claimant Count Change report showed a skyrocketing number of 856.5K after being 5.4K in March (revised) and against the expected reading of 675K. Before April, the labor market seemed to be more stable than could be seen and would manage to stand against the global negative situation. Of course, it’s not millions of people, like in the USA, but for the United Kingdom, it’s still a very significant number of unemployed. The government will have to employ them, which may be quite difficult during the Brexit transition period.
No matter what, it can be clearly seen that the British economy handles the crisis much better than one could have imagined. This and positive external background support the Pound in its attempt to rise.