The pound rallied against the greenback yesterday despite the release of weak economic data from both the US and the UK. While the UK’s Claimant Count Change data for March was unexpectedly higher, the US building permit data for the same period missed estimates. However, the market was focused on the US economic data. This enabled the pound to strengthen against the greenback. Overall, the GBP/USD pair rallied from a low of 1.2369 to a high of 1.2449 in the past 24 hours.
According to the UK’s Office for National Statistics, the country’s Claimant Count Change, which reflects the change in the number of employees claiming unemployment-related benefits, increased by 28,200 in March after declining by 11,200 in the previous month and disappointing economists who were forecasting a drop of 2,500.
Also, the UK’s employment rate was 75.80% in the three months ended February 2023, up 0.20% from the three months ended November 2022. The number of employees on payroll rose by 31,000 in March to 30 million. Notably, the economic inactivity rate fell by 0.40% q-o-q in the February 2023 quarter to 21.10%.
The count of vacancies declined by 47,000 in the quarter to 1,105,000 in the three months that ended March 2023.
The ONS also stated that the UK’s average total pay growth was 5.90% (including bonuses) in the three months that ended February 2023. This compares with a 5.70% increase in the previous three months. Economists had anticipated only a 5.10% increase. Excluding bonuses, regular pay growth was 6.60% in the same period.
While the private sector recorded regular pay growth of 6.90% in the three months that ended February, public sector pay growth was only 5.30% in the same period.
The unemployment rate stood at 3.80% at the end of February, up 0.10% from the previous month. Economists did not anticipate any change in the unemployment rate.
According to the US Census Bureau, the country’s building permits fell to 1,413,000 units in March from 1,550,000 units the previous month, missing forecasts of 1.46 million units. The reported figure is 24.80% lower than the March 2022 level of 1,879,000 units.
The Census Bureau also stated that housing starts were 1,420,000 units in March, down from 1,432,000 units in the prior month but higher than forecasts of 1.40 million units. The reported figure is 17.20% lower than the March 2022 level of 1,716,000.
Also, privately owned housing completions were 1,542,000 units in March, a decline from 1,552,000 units in February. The reported figure is 12.90% higher than the March 2022 level of 1,366,000 units.
The weak economic data from both countries are expected to keep the GBP/USD pair range-bound in the short term.
The historical price chart indicates that the GBP/USD pair is ascending after testing the support at 1.2355. The next resistance is anticipated only near 1.2525. Additionally, the GBP/USD pair is trading above its 50-day moving average while the stochastic indicator is in the bullish zone. Therefore, we anticipate the GBP/USD pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
