GBP holds gains after UK jobs report

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waterman
Written by Dan Waterman
May 13th 2025
Yet more good news for GBP as it continues to stalk the Euro..

A further 0.2% has been claimed today by the Pound versus the Euro (every little helps) after the UK jobs release. It means the pair is now up by almost 3.5% in the last month, meaning overbought territory is likely.

Overbought territory is when a currency either continuously gains against another over an expected period of time (outside of the norm) or jumps quickly and by a lot. It's very common and often easy to spot and happens due to trader positions closing and re-opening at slightly a higher price and so on until traders bet the other way.

Unemployment in the UK ticked up to 4.5% for the month of March in-line with expectations. It's the first increase in 4-months, but isn't expected to be the last this year after we await to see what the NI changes in April make to the jobs market. 4.5% is the highest level seen since 2021.

But more importantly today, the average earnings figure for the UK rose to 5.5%, down from 5.7%, but ahead of the estimated 5.2%. This is the reason for GBP strength today, because wage inflation is a major driver of overall inflation and inflation as you know is a key marker for interest rates. 

Elsewhere today we have had MPC member Huw Pill speak about his decision to want to keep interest rates unchanged at the last BoE meeting. Both current and near-term inflation risks was his reason and judging on today's data, he will again be voting for no change next month and will unlikely not be alone. This would be GBP positive.