Here’s the reaction in GBP/USD to last month’s jobs report.
GBP/USD reaction to May UK labour report
This came as the claimant count was better by 2.4k more than expected, the unemployment rate dropped but earnings fell. Cable went up 45 odd pips.
Today it was an even better result for claims by 9.3k, another fall for the unemployment rate, wages fell again, and this time we fell 30 pips.
GBP/USD after the jobs report today
So what has changed?
The market is looking for any clue that adds further to the interest rate picture and one key is inflationary pressures. We get that in wages. The market has ignored the better jobs number and has focused on prices.
That’s a key change in the markets mindset and one we need to be aware of as it changes the dynamics of this data point and its effect on trading.
Picking up on these clues and changes early can be the difference between a winning or losing trade.
