Today’s analysis will greatly cover the GBP and the British labour-market dynamics. From the start of 2015, we have seen that the economy of Great Britain has grown from strength to strength. From December their economy has taken a turn for the best, they have created over 103 000 jobs which were more than double of the expected forecast. With this, the people that claim benefits had decreased by almost 3% in the working and able market and finally wage increases are on the rise. All this is very good news for both the Prime Minister and consumer. More the Prime Minister as they are leading up to an election in May 2015. There is an overall sense of positivity and the fact that the Bank of England (BOE) is on the correct path and seems there are not too many worries about deflation prospects.
The details of the British economy are as follows:
- Wages have increased and this includes bonuses. The wages rose to over 2% in December.
- 73% of citizens between the ages of 16 – 64 are now working, this is a record high since 2004.
- There are 607,998 more people working in the UK than last year
- There is almost a 6% drop in the unemployment rate since December 2014 and is at its lowest since 2008
For the next couple of months, it will pay you to remember some other points that could drastically effect trades of all currencies but mainly the GBP. People who are out of work and not seeking or are not able to work is trending higher. This issue rose by 21,895 between July 2014 and September 2014, which estimates to about 6000 more than the previous year. This is one issue that could be the lower on the promising jobs rate. We will need to keep an eye on this as if the trend changes so will the value of the GBP.
The second point to note would be that the wages data (bonuses) tend to be paid in January – February of each year, this is why we see an increase in the wage data now. The fact is that wages actually fell as they excluded bonuses, this could be a worry, however the creation of jobs does bring this up and the BOE will be sure to include this note in their hike of rates. This is worth mentioning however I personally do not see this affecting the GBP soon. With the EUR / GBP slowly making its way to a 7-year low, the GBP is secondly the fastest growing currency after the USD.
Today’s Trading Tip:
Call GBP / EUR. There is no recovery for the Euro in the next 2 days. I await with bated breath the minutes of the meeting held by the Eurogroup regarding the Greek crisis.
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