The post-referendum knee-jerk reaction in the sterling is over and the focus is now on two things, what will be the future British relations with the European Union and how the economy is performing after the referendum vote, which has opened up the possibility of an exit from the Union.

Yesterday, first post-referendum inflation data were released and as expected inflation edged up and the input costs of the producers have surged. In the aftermath, the employment is expected to weaken, especially the wage growth component. Layoffs may not have started but fresh hiring could have been stalled.

Today’s employment report to be released at 8:30 GMT and will show the knee-jolt impact in the labor market.

Below is the preview of the report -

• As of now unemployment rate in the UK stands at 4.9 percent and median estimate suggests it is likely to remain same.
   
• So the major focus will be on  the earnings growth since that will be a measure of economic wellbeing.
   
• Moreover, a positive wage growth should help to downsize the fear of a slowdown in the economy. It will be a nice evidence that companies are ready to increase wages even in the face of a potential exit from the union.
   
• Wage growth has been declining since October last year when it reached a peak of 2.8 percent growth excluding bonus. Wage growth was 2.2 percent excluding bonus and 2.3 percent including it last month.
   
• Today earnings growth is expected to be 2.4 percent including bonus and 2.3 percent excluding it.

It may turn out to be a non-event id it comes in line with expectations. However, in such a case the pound is likely to remain strongly bid but any deterioration below 2 percent would weigh heavily on the sterling. The pound is currently trading at 1.302 against the dollar.