There's been a little bit of softness in the most recent job data with the unemployment rate ticking higher. For the month of August a reading of 3.9% marked a 0.1% increase on both the prior reading and the consensus forecast while the employment change showed quite a large drop (-56k vs +26k exp vs +31k prior). Wage growth also pulled back with average weekly earnings +3.8% 3M/Y vs +4.0% 3M/Y expected and the prior revised lower by 10 basis points to +3.9% 3M/Y.
Overall there is a hint of weakness here but it should be remembered that the labour market remains strong by historical standards. In terms of market reaction there was a small dip lower in the pound but it has since shrugged of the release with the markets far more concerned with the latest Brexit developments.
Barnier: Brexit deal "still possible"
Sterling has moved up near its recent highs against the Euro and US dollar this morning following more encouraging comments on the Brexit front. Michel Barnier has said that a new withdrawal deal is "still possible" this week with the caveat that it has become "more and more difficult" as we approach Thursday's key EU summit. Once more this is another example of the markets honing in on the positive aspects while looking through the negative, a recurring theme of late that has been a key driver behind the recent gains in the currency. There remains much to be done before a deal can even be brought back to be voted on by UK MPs, but the markets are clearly exhibiting a positive reaction function to the latest Brexit developments and that's good news for sterling bulls.
Separately Jacob Rees-Mogg has claimed that if a deal is agreed with the EU then it will pass through parliament, but these remarks should be taken with a pinch of salt considering that the terms of any deal remain unknown and as a staunch Brexit supporter he may be inclined to considerable bias.
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