UK labour market improvement pushed GBP up

The strengthening of GBP accelerated on Tuesday due to unexpectedly strong labour market data. GBPUSD rose to 1.3270, and EURGBP fell below 0.8900.

Claimant Counts fell by 29,800 in October compared to an average growth forecast of 20,300. Average earnings for the three months to September were 1.3% higher than a year earlier (+1.9% ex bonuses).

The fresh data eliminated fears that last month’s rise in coronavirus cases and the approaching partial lockdown could cause a sharp contraction in the labour market. Since the release, GBPUSD has added about one cent, bringing the five-day rally to 2.5% and sending it into the peak area of early September. It is worth noting that the pair has been too unstable above 1.33 for the last 18-months.

EURGBP also found itself in the area of local extremums, having dropped to the lows of 2H20.

In both cases, the British pound will have to pass an important test as to whether investors are ready to let it enter a new level.

The FxPro Analyst Team