home Forex May 19 – UK Jobless Rises & German ZEW Preview

May 19 – UK Jobless Rises & German ZEW Preview

GBPUSD & EURGBP, H1

UK labour market data revealed a massive 856.5k spike in jobless claims in April, reflecting the impact of the lockdown, while the figures for March employment cover a period preceding the lockdown (which began on March 23rd in the UK), and showed the unemployment rate actually dipping, to a rate of 3.9% from 4.0% in February. Average household earnings data also preceded the lockdown, and showed a dip to a growth rate of 2.4% y/y in the three months to March in the with-bonus figure, down from 2.8% y/y in the three months to February.

Cable rallied to 1.2250 on a softer dollar and data not being a weak as expected overall, EURGBP moved down to test the daily pivot point at 0.8920.

There is some risk that German ZEW Economic Sentiment could fall back slightly in the May reading. The DAX (GER30) bottomed out in March as lockdowns came in and the improvement helped to boost sentiment in the April reading. But Germany’s benchmark stock index has essentially moved sideways of late as data releases reveal the extent of the impact of the lockdowns on economic activity in Germany and globally. Against that background median expectations are for 30.0 in May – versus 28.2 in April. Hopes still are that economic activity will improve again in the second half of the year, although clearly uncertainty is much higher than usual and if a second round of infections should make new restrictions necessary, the risk of a longer term negative impact on investment and production capacity is very high.

Later in the north american session we have testimony to the Senate banking commission from Messrs. Powell & Mnuchin and US Housing Starts and Building permits.

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Stuart Cowell

Head Market Analyst

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