November 15, 2021 14:16:38
This week sees the release of UK employment data tomorrow. This is followed by the latest CPI figures on Wednesday. The former is perhaps more important as we all know inflation will only be heading in one direction.
The Bank of England have made it clear they wish to see how the labour market is coping since the furlough scheme ended. Signs of rampant unemployment initially forecast last year don’t look likely now. We note these unemployment numbers are for the three months to September. So, redundancies are only likely to show up in next month’s October data.
In the meantime, the bank will be keen to build up a more accurate picture of the current jobs market. They have been heavily criticised for the guidance leading up to its previous MPC meeting. Policymakers had suggested they would raise rates in order to curb rising inflation expectations. Most expect a rate rise next month, though there is no Monetary Policy Report and updated forecasts.
EUR/GBP upside capped by 200-day SMA
This pair had been trading around 0.8550 over the past week. Brexit issues have been bubbling under the surface with the possible trigger of clause (Article 16) concerning the Northern Ireland protocol. The extent of the UK changes and any EU response will be significant.
The surge higher on the disappointing BoE meeting stalled at the 200-day SMA. This sits at 0.8575 and acts as strong resistance. Prices are now trading below the 100-day SMA at 0.8531. Strong, hawkish economic figures will see sellers aim for 0.8521 ahead of more support at 0.8472. The August low at 0.8450 should be next solid support.
GBP/JPY consolidating at recent lows
This pair collapsed the most after the BoE disappointed the market expecting a rate hike at the start of November. Prices had topped out at 158.21 in late October on hawkish central bank expectations.
Prices are now tracking sideways trading between the 50-day and 100-day SMAs at 152.54 and 153.22. The upper part of the range also tallies with the halfway point of the July to October move at 153.33.
If we drop below the 50-day SMA, the long-term 200-day SMA sits at 152.06. Strong data means buyers should appear. They will need to get above 153.78 to reverse the bearish trend.
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