EUR/GBP holds above 0.86, extending gains despite strong UK jobs data. Unemployment declined to 4.7% and almost 200,000 people were added to the payroll.

The Pound is under performing its major peers, slipping below 1.41 versus the US Dollar, whilst EUR/GBP hold over 0.86. Sterling did not maximize earlier gains following the upbeat jobs report. 


Unemployment falls


The UK jobs market appears to be regaining its poise. within the three months to April, unemployment within the UK ticked lower to 4.7%, in line with forecasts and down from 4.8% in March. Whilst this is often undoubtedly a move within the right direction, there are still some clouds on the horizon. Unemployment is predicted to select up in Autumn when the furlough scheme involves an end. 


The data also showed a record jump in workers on the payroll in May compared to April. 197,000 more jobs were added over the month as hospitality and entertainment companies scrambled to rent staff before the easing of pandemic restrictions and indoor re-opening. Indoor hospitality restarted on 17th May. 


Headwinds remain


Boris Johnson pushed back the complete lifting of restrictions for an additional month, which suggests that the hospitality sector is never out of the woods yet. The delay of the re-opening continues to tug on demand for the Pound. 


Brexit tensions also still weigh down the Pound. 


Attention will address BoE Andrew Bailey who is thanks to speak shortly. 


UK CPI data is due tomorrow. Expectations are for CPI to rise to 1.8% YoY in May. 


The Euro is finding its feet again after the dovish ECB meeting. German inflation data cane in needless to say 2.4% YoY. Weakness in US treasury bonds pulling on the USD, supporting the Euro. 


Where next for EUR/GBP? 


EUR/GBP has been trending lower since late April. It trades below its 6 week descending trendline. The pair has rebounded off 0.8570 and has climbed above its 50 sma and 100 sma on the 4 hour chart. 


The RSI is pointing higher and supportive of further gains whilst it remains out of overbout territory. 


Immediate resistance are often seen at 0.8630 the ascending trendline resistance. an opportunity above here could open the door to 0.8650. Beyond this level buyers could gain traction. 


On the flip side, support are often seen around 0.86 the 50 & 100 sma and round number. A move below here see the sellers target 0.8560 the May low for a deeper selloff.