The pound was able to recuperate partially earlier today following the publication of the better-than-expected labour market data in Britain for October. Even still, the sterling continues to reel against the dollar. You can read more about the underlying dynamic on the GBPUSD from our newest comprehensive analysis.
Headline unemployment in Britain shrunk to 4.3 per cent in October, above market forecasts which were anticipating a smaller contraction to 4.4 per cent. This marks the fourth consecutive month of labour market strengthening.
The robust labour market data bolstered the pound, which has been struggling as of late because of disappointing growth data for the third quarter. As can be seen on the 4H chart below, the GBPJPY is currently attempting to begin a new Markup, as postulated by the Wyckoff Cycle theory.
The preceding Markdown took the form of a 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. Its dip underpinned the major Re-Accumulation range, spanning between the 61.8 per cent Fibonacci retracement level at 152.455 and the major resistance level at 153.600.
If the current attempt at a decisive breakout is successful, the resulting Markup would first probe the 38.2 per cent Fibonacci retracement level at 154.658, which is about to converge with the 200-day MA (in orange) and the 100-day MA (in blue).
This crossover would make it an even more prominent resistance level. However, if the price action manages to break out above it as well, its next target will be the 23.6 per cent Fibonacci at 156.021.
Despite the better-than-expected unemployment numbers, the recorded pace of employment growth missed the preliminary forecasts. According to the labour market findings of the Office for National Statistics, the number of people claiming unemployment benefits declined by 14.9 thousand vs 39.2k expected.
Nevertheless, the jobs report, as a whole, now provides more reasons for the Bank of England to consider scaling back the rate of its asset purchases in light of the improving labour market conditions.