The British pound continued its growth despite the indicators on the UK labor market, which were not particularly encouraging for the reporting period from July to September this year. On the other hand, the government's measures and programs to support the labor market are beneficial, although they are very expensive.
Today's report from the Bureau of National Statistics shows that the unemployment rate rose to only 4.8%, compared to 4.5% for the period from June to August this year. The data coincided with the forecasts of economists, so it did not significantly affect the market for the worse. The number of unemployed rose by 243,000 to 1.624 million. But the number of employed Britons in annual terms decreased by 247 thousand and amounted to 32,507 million people. The only positive thing that helped the pound stay at the same levels and continue its upward trend against the US dollar was the report on the growth of real weekly wages, which increased by 1.3% in annual terms, which is quite a significant increase that can lead to increased spending. Excluding bonuses, wages jumped by 1.9% immediately, while economists had forecast growth of only 1.5%.
However, it is worth remembering that as long as the government's support programs continue to work, we will not see real numbers and the real problem that exists in the labor market. According to some estimates, after the end of all programs next year, unemployment in the UK may peak at 7.4%. The uncertainty around Brexit is also reflected in the labor market and constrains the pound's growth in the short term.
So far, optimism remains against the background of the results of tests of the coronavirus vaccine by Pfizer and BioNTech. However, you can hardly bet on this in the longer term, when there are much more short-term risks.
As for the technical picture of the GBPUSD pair, the breakout of the next resistance at the base of the 32nd figure led to a powerful growth of the trading instrument in the area of the maximum of 1.3260. Now the task of the bulls is to break through this range, which will open a direct road to the levels of 1.3320 and 1.3390. We can talk about the prerequisites for the formation of a major downward correction only after the trading instrument returns to the level of 1.3205, which will quickly cool the buyers' ardor and push the pair to the lows of 1.3100 and 1.3035.
EURUSD
As for the European currency, after the latest data, we can conclude that the Eurozone economy is entering another period of high uncertainty, low economic indicators and a shutdown of the service sector.
A report from the ZEW research center indicates that the index of economic expectations in Germany in November this year fell to 39.0 points against 56.1 points in October, when no one thought that the coronavirus pandemic, or rather its second wave, would force the European authorities to resort to a partial lockdown of the economy. Let me remind you that since the beginning of November this year, quarantine measures have been in effect in Germany, which are aimed at combating the spread of COVID-19. Citizens of those German territories where the daily number of infections is 35 people per 100,000, now need to wear protective masks in public places. In regions where the number of infections is 50 people per 100,000 inhabitants, bars and restaurants operating after 23:00 are closed, and more than 10 people are prohibited from gathering at parties.
As for the assessment of current conditions in the German economy, it has also become more pessimistic. The report shows that the index fell in November to -64.3 points from -59.5 points in October, while economists had expected the index to be -65.0 points in November. Everyone is concerned about the economic consequences of the second wave of COVID-19, and how quickly a vaccine will be found that will go to the masses. If the situation with the coronavirus does not improve in November, and it is necessary to maintain quarantine measures, the German economy may again fall into recession.
According to the latest research, the Eurozone's GDP may shrink by 2.3% in the 4th quarter, and this is provided that in November the economy will function only 10%-15% below its potential, while in the spring period almost 30% of economic activity was paralyzed.
As for the figures that were published today for Italy and France, in general, they did not particularly please anything. The report shows that industrial production in Italy in September this year decreased by 5.6% compared to August and by 5.1% per annum. The summer growth and surge after the collapse fizzled out, and this became the main problem for production.
Another thing is industrial production in France, which in September managed to show growth of 1.4%. A report from the National Bureau of Statistics Insee showed that industrial production increased by 1.4% compared to the previous month, while economists had expected growth of 0.6%. The main growth was due to the continued good production rates in the manufacturing industry, where growth was 2.2%. Construction sank the most - 8.4%.
As for the technical picture of the EURUSD pair, an unsuccessful attempt to break through the support of 1.1800 did not lead to a significant drop in the trading instrument. Only a consolidation below 1.1800 will lead to the formation of a new bear market that can push the euro to the lows of 1.1740 and 1.1660. It will be possible to talk about the resumption of the bullish trend only after the buyers of risky assets return control over the resistance of 1.1860, which will lead to an instant return of EURUSD to the monthly highs of 1.1915 and their update in the area of 1.1970.