The British pound lost ground early in the European session following the publication of weak macro data from the UK, reducing the chance of a hawkish turn from the Bank of England. The reading for March showed that the unemployment rate in the UK rose to 3.9% against an expected 3.8% and an earlier reading of 3.8%. What’s more, the negative overtones of the publication were provided by a big jump in unemployment claims, which came in at 46.7 thousand against an earlier reading of 26.5 thousand (today’s reading beat analysts’ expectations by more than 49%. Wage growth excluding bonuses is also down and came in at 6.7% y/y vs. the expected 6.8% y/y. At the moment, the money market is pricing in a 30% chance of a halt to the hike cycle at the upcoming BoE meeting in June.
Preliminary data from the UK’s tax office showed the first drop in total headcount in more than two years in April, down 136,000 from March.
The GBPUSD pair reacted with declines to today’s UK data reading, however, the scale of the sell-off has already been largely negated. The downward impulse stopped at the support defined by the 200-period exponential moving average (golden curve), which is currently the main support on the H4 interval.