London, Traffic on Oxford street. Image source: s4svisuals © 123RF.com
The UK Unemployment Rate fell to 4.9 per cent in the three months to February, said the Office for National Statistics. The findings of the labour force survey beat the initial market forecasts, which were expecting the rate to remain flat at 5.0 per cent.
Headline unemployment thus fell for the second consecutive month for the first time since the beginning of the coronavirus crisis. This performance solidifies the robust performance of the British economy over the past several months.
UK Unemployment Rate. Image source: TradingEconomics.com
In the labour market report, it was further revealed that the number of people claiming unemployment benefits fell significantly below what the consensus forecasts were projecting.
Only 10.1 thousand people filed for support over the same period vs 24.5 thousand expected. In comparison, the number of claimants reached 86.6 thousand over the previous month.
The positive news is that the drop in unemployment was achieved during a period of tight government restrictions, which underpins the ability of the British economy to continue stabilising despite persisting epidemic conditions.
Nevertheless, the coronavirus fallout continues to exert a heavy toll on the labour market. It was also revealed that employment fell sharply by 643 thousand compared to the same period last year.
The labour force numbers caused additional volatility outbursts on the GBPUSD, which was already being affected by strong bullish sentiment. As can be seen on the 4H chart below, the pair touched the psychologically significant resistance level at 1.40000 yesterday, which elucidates this bullish momentum.
The resistance level held the last couple of times that it was tested, which could prompt yet another bearish correction. If bulls get denied at 1.40000, this could cause a dropdown to the minor support at 1.3900. The significance of the latter stems from the fact that it highlights the last swing peak.
In other words, the resistance-turned-support is now likely to function as a potential dip for a new correction.
GBPUSD 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
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