Vital to assess Pound’s move after ILO employment report today

For the past three days, Pound has moved sharply, gaining against all of its major counterparts. While weaker Dollar is playing a role here, but it could be beyond that. There is a possibility that Pound may have been over-shorted.

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

Pound is marginally down against Dollar and yen too. So it will be vital to watch out the movements after ILO report. If report comes out well, but Pound fails to secure upward momentum then we may be looking into greater downside. If Pound cashes in on better employment report, then there may be juice left or renewed short covering may take place.

But if data is weak and Pound gains sharply after initial drop, then there may be lots of juices left and Pound can break higher above 1.45 area.

Below is the review 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. But in last reading it came better than expected at 2.2% excluding bonus and 2.1% including it.

• Today earnings growth is expected to be 2.3% including bonus and 2.2% excluding it.

Pound is currently trading at 1.438 against Dollar.