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UK unemployment surged to a record high in five years

UK unemployment surged to a record high in five years

Updated

What happened?

UK jobless rate surged to its highest level in almost five years in the fourth quarter. However, it wasn’t a surprise as analysts accurately predicted this outcome since these days the UK has to cope with two serious problems simultaneously: Covid-19 and the post-Brexit period. The government poured an enormous amount of money into wage subsidies, which allowed to support almost 4 million jobs at the end of 2020 after one of the deepest economic slumps in global history.

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Not all the data was bad!

Claimant Count Change came out much better than it was expected. The number of British people claiming jobless benefits dropped by 20 000, while the forecast was the increase of 13 800. Besides, Average Earnings beat expectations as well. What about UK’s success with vaccines? The UK is one of the leading countries by the number of vaccinations made. 18 million British people have already got the vaccine. It helped to reduce hospitalizations, but UK Prime Minister Boris Johnson has still decided to go slow on easing lockdowns. They will be held in four stages between 8 March and 21 June.

Technical analysis

GBP/USD is getting closer to the psychological mark of 1.4100, but the upside is limited since GBP/USD is overbought. The RSI indicator has jumped above the 70.00 level and the pair is touching the upper trend line of the ascending channel established in November. Besides, the MACD started declining and crossed the signal line to the downside. These factors in combination point to the soon pullback down. The support level is at the recent low of 1.4050. The move below it will drive the pair to the low of February 22 at 1.4000.

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