News that the UK labor market was stronger than had been predicted helped to briefly lift the Pound Sterling out of the doldrums. According to the UK Office of National Statistics, the average earnings including bonus for the three month period through to November 2018 rose to 3.4%, slightly better than the flat rate of 3.3% which has been predicted. At the same time, the ILO’s unemployment rate unexpectedly fell to 4.0% from 4.1%, while forecasters had believed that the rate would remain unchanged. That helped to improve Pound sentiment, especially given the uncertainty over the looming Brexit and the current economic slowdown.
As reported at 11:32 am (GMT) in London, the GBP/USD was trading higher at $1.2908, a gain of 0.10% and off the session peak of $1.2928. The EUR/GBP was lower at 0.8799 Pence, down 0.18% and off the session trough of 0.87912 Pence while the high was pegged at 0.88286 Pence.
Hopes Pinned on Market-friendly Brexit
Currency strategists have been holding out hope that the Prime Minister will be able to push some sort of a deal through on the Brexit; the threat of a no-deal was seen as the most devastating of all possible outcomes. Theresa May is likely to agree to additional concessions in an effort to put an agreement on the table that the British Parliament will finally approve. FX traders still feel that a market-friendly outcome is possible, but the threat of crashing out entirely without a plan has not been completely dismissed.