Earlier today, the Office for National Statistics in the United Kingdom published its latest labour market report. According to the findings of the survey, the British unemployment rate has climbed to 4.8 per cent in the third quarter.
The observed uptick in headline unemployment in September met the initial market expectations and registered a noticeable increase from the 4.5 per cent that were recorded in Q2. This highlights the worst performance of the British labour market since September 2016, and just before the crucial Brexit deadline.
The deteriorating employment conditions in Great Britain are owing to the deepening coronavirus pandemic. Its fallout is further exacerbated by Boris Johnson and his cabinet quickly running out of time to strike a trade deal with the EU.
The PM was amongst the first world leaders to congratulate Joe Biden for his victory in the US Presidential Elections, stating that the US is the closest partner and ally of the UK.
His remarks could potentially be interpreted as being suggestive of a change of directions for Johnson, assuming that the talks with Brussels fail to break the deadlock before the December 31st deadline.
At any rate, the last few days have been quite good for the pound, but not as much for the euro. As can be seen on the 4H chart below, the EURGBP rebounded from the 100-day MA (in blue) recently, which was converging towards the upper boundary of the descending channel at that time, and is currently testing the major support level at 0.89600.
The latter serves the role of a lower boundary for a broad consolidation range expanding to the major support (currently resistance) level at 0.90150. Should the price action manage to break down definitively below the former support, this would elucidate even stronger bearish sentiment in the market.
There are plenty of reasons justifying such expectations. Namely, the rising bearish momentum, which is demonstrated by the MACD indicator.