ILO unemployment to decide pound's next move

Pound has been performing very well post budget as yields on Gilts rose from sharp decline. Yesterday Bank of England President Mark Carnet provided boost to pound saying that the central bank is getting closer to hiking rates.

Today bulls are to face ILO unemployment report for three months to May.

Pound is likely to retain bullish momentum but weaker than expected employment report would sour the mood.

ILO unemployment reading to publish around 8:30 GMT.

• As of now unemployment rate in UK stands at 5.5% and median estimate says it will remain so in today's reading.

• Once again major focus will be on earnings growth, which has gained sharply in last two report. Average earnings excluding bonus grew by 2.7% in April and including bonus by 2.7%.

• Today market is expecting earnings growth pretty high at 3% excluding bonus and 3.3% including it. Report may not live up to such high expectation.

Impact -

• Expectation miss would not necessarily weaken pound. Wage growth of above 2.5% would still be good enough. In that case, Pound is likely to find support around 1.558 area.
  
  
• However any wage growth below 2.5% might sour the bullish sentiment.
  
  
• Stronger data even a report in line with expectations is likely to push pound higher around 1.572 area, where it might find some resistance