ILO employment report may add some directional volatility to Pound

For the past 11 days, Pound has been consolidating within a small range against Dollar of just 230 pips. So far, many economic dockets such as inflation readings have failed to spark major volatility and provide some clarity over directions ahead of Brexit vote next week.

Focus now will be on ILO employment report today, to be released at 8:30 GMT.

Pound is marginally down against Dollar but up against Yen, Franc and Euro. It is also higher today, against all three commodity currencies.

Below is the preview of the report -

• As of now unemployment rate in UK stands at 5.1% and median estimate suggests it is likely to remain same.

• So major focus will be on earnings growth, since BOE policymakers in several instances announced they will be looking at wage growth component and current rate is not sufficient to generate targeted inflation. This component has gained sharply since last year, however slowing down in second half of the year. In March earnings grew 1.8% y/y including bonus and 2.2% excluding it.

• Today earnings growth is expected to be 1.7% including bonus and 2.3% excluding it.

Pound’s reaction to wage growth will be vital to watch. Pound is currently trading at 1.443 against Dollar.