The ILO unemployment rate in the United Kingdom rose to 4.8% for the three months ending in August, up from 4.7% reported previously, according to data from the Office for National Statistics (ONS) released on Tuesday.
This figure was higher than the anticipated rate of 4.7%.
The report also highlighted that the number of individuals claiming unemployment benefits increased by 25,800 in September, a rise from a revised figure of 17,400 for August.
When looking at employment change, it was noted at 91,000 in August compared to 232,000 in July.
In terms of average earnings, excluding bonuses, the UK saw a slight year-on-year increase of 4.7% in August, which was a bit lower than the previously recorded growth of 4.8%. Market consensus matched the 4.7% figure.
However, average earnings that include bonuses rose by 5.0% over the same time frame, showing an acceleration from 4.7% in the quarter that ended in July, which surpassed expectations of 4.7% as well.
GBP/USD Response to UK Employment Data
The GBP/USD pair experienced some selling after the jobs report was released. As of now, the exchange rate is down 0.24% for the day, sitting at 1.3300.
Summary of the UK Employment Report
Looking ahead, the UK labor market report is set to be published on Tuesday at 6 am Japan time, with expectations indicating that the ILO unemployment rate for the three months ending in September will hold steady at 4.7%. Average weekly wages, including bonuses, are expected to increase by 4.7% in this period, while growth excluding bonuses is predicted to slow to 4.7% from the previous 4.8%.
Independent analyst Michael Hewson commented that “the chances of the Bank of England reducing interest rates anytime soon seem as low as the government would prefer. Wage growth saw only a modest slowdown from 5% to 4.8% in the three months leading to July, while the unemployment rate remained stable at 4.7%.”
Potential Impact of the UK Jobs Report on GBP/USD
A negative surprise regarding wage growth could further weaken the British Pound Sterling (GBP) and pull the GBP/USD pair closer to the 1.3300 level. If weakness continues, it might approach the 1.3260 area, which is a low set last Friday.
On the flip side, positive news might only see limited reaction due to ongoing concerns about UK fiscal policies. Yet, a stronger indication could help push GBP/USD past the immediate resistance point of 1.3365, potentially targeting a recovery around 1.3400. The momentum could even drive it towards another key level around 1.3440 as it aims for the psychological barrier of 1.3500.
