UK labor data beat estimates handily sending cable to session highs as employment situation appears to improving raising hopes amongst investors of better growth in 2013. UK claimant count printed at -3K versus estimates of 7K while the claimant count rate remained at 4.8% as expected. The unemployment rate also remained the same at 7.8% but the ILO jobless numbers fell by 82K for the three months through October. The one sour note in the report was that average earnings rose only 1.8% versus 1.9% forecast as wage pressures continue to weigh on UK workers.
Still, the overall labor report was certainly an upside surprise given the lackluster rate of recent economic data that suggested UK may dip into a triple dip recession in Q4 of this year. Private sector employment has now reached its highest levels since 1999. The labor data suggest that aggregate demand in UK may be better than the market consensus as the anticipated post-Olympics layoffs have not materialized. If labor data numbers continue to improve for the next several months, economic activity is sure to follow and the prospect of yet another contraction will be greatly diminished.
Cable responded well to the news rising to session highs of 1.6130, but the pair is likely to stall at these levels ahead of major triple top resistance at 1.6150. With focus turning to the FOMC meeting later today, currency markets are likely to tread water until traders get more clarity from Dr. Bernanke and Co. but if the Fed maintains a dovish bias the 1.6150 level will likely be broken as the day proceeds.