The latest unemployment data in the UK underlined the bumpy and uneven pace of the global economic recovery. To learn more about how this is affecting demand for safe-haven securities, check out our newest analysis of gold.
Earlier today, the Office for National Statistics revealed that there were no changes in UK unemployment, as was anticipated by market forecasts. However, there were more people claiming unemployment benefits than initially expected. This caused an upsurge in selling pressure on the pound in the short term. The pound is likely to continue depreciating amidst the renewed strengthening of the dollar.
As can be seen on the 2H chart above, the GBPJPY is currently consolidating just below the 38.2 per cent Fibonacci retracement level at 156.102. This followed a reversal from the 100-day MA (in blue), serving as a floating resistance.
Notice that the price action appears to be developing a massive Head and Shoulders pattern, which indicates the probable emergence of a new downtrend. The 200-day MA (in orange) underpins the neckline of the structure at 155.370.
A breakdown below the neckline would be followed by a test of the last Fibonacci threshold at 154.884. Unless a bullish pullback emerges from there, the new downtrend is likely to head towards the last swing low at 153.200.
Headline unemployment expectedly remained at 4.1 per cent in the last quarter of 2021, registering no changes from the three months to November. This is the lowest reading since the second quarter of 2020, right before the initial coronavirus crash. This solid labour market performance reflects the latest GDP numbers recorded over the same period.
Meanwhile, the number of people claiming unemployment benefits fell by 31.9 thousand, missing the market forecasts for a decline of 36.2 thousand. January's reading thus marks the weakest performance on record since March 2021.