Pound could gain further on better job report

After massive slump post inflation report last week, Pound is showing strength so far this week. After trading at low as 1.504 on Monday, it is now up 120 pips from there.

ILO unemployment reading to publish around 9:30 GMT today.

• As of now unemployment rate in UK stands at 5.4% 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 few reports, fuelling rate hike bets on Pound. Average earnings excluding bonus grew by 2.8% for three months to August and 3% including it.

• Today market is expecting slowdown in earnings growth at 2.7% excluding bonus but to grow 3.2% including it.

Impact 

• Data as expected may not be very bullish for Pound as Bank of England (BOE) mentioned that current wage growth is not sufficient to give a rise in inflation.
   
• However any wage growth below 2.5% likely to sour sentiment.
   
• With better report, expect Pound to move up and trade near 1.525-1.527 area against Dollar, from current 1.516.