UK jobs data could generate a reversal in GBP/USD rates.

Shortly revealed jobs data out of the United Kingdom could see a reversal in GBP/USD rates, if the unemployment rate in June peaks over the consensus forecast 4.2%.

Should the economic data take this turn then it may hold substantially more weight than usual when considering the fact that at some stage the removal of the British government’s £33.8 billion furlough scheme in October will obviously take hold and have a degree of impact.
It is estimated that this scheme has supported some 9million workers and removing the scheme come late October could see a raise up to 10% unemployment should the estimated 3million employees lose there employment.

This is quite a contradiction to the relatively brighter picture painted by the Bank of England, with committee members projecting the unemployment rate to rise “to around 7.5% by the end of the year” despite admitting “considerable uncertainty remains about the prospects for employment after those support schemes unwind”.

With the central bank adding that “the existing stance of monetary policy remains appropriate”, a marked increase in the level of unemployment may force the BoE to reassess its current wait-and-see approach and could lead to the expansion of the current £750 billion quantitative easing (QE) program.

To that end, GBP/USD rates may come under pressure should general employment data lean to the downside, unfortunately possibly resulting in investors positioning for the provision of more monetary stimulus and discounting the British Pound against its major counterparts
Other issues relating to a possible dip back to the downside would be rising geopolitical tensions between China and the US over sanctioning potentially pushing the safe haven higher.

Economic Calendar

Expected Previous
08:30 EUR Sentrix Investor Confidence -15.2 -18.2
14:00 USD JOLTS Job Openings (Jun) 4.91M 5.397M
15:30 USD 3-Month Bill Auction - 0.1%
15:30 USD 6-Month Bill Action - 0.105%
21:00 NZD REINZ House Price Index (Mom) (Jul) - 0.9%
22:45 NZD Electronic Card Retail Sales (Mom)(Jul) 13.8% 16.3%
22:45 NZD Electronic Card Retail Sales (YoY) (Jul) - 8%
23:01 GBP BRC Like-For-Like- Retail Sales (YoY)(Jul) 7.6% 10.9%
23:50 JPY Current Account n.s.a (Jun) ¥110B ¥1176.8B
23:50 JPY Bank Lending (YoY) (Jul) 6.5% 6.2%
23:50 JPY Trade Balance - BOP BASIS (Jun) - ¥-556.8B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.