UK: Sliding trend in employment growth as Brexit uncertainties set to rise - Westpac

UK’s Oct. labour data showed a disconcerting fall in employment, rather than expected rise, and may presage officials’ concerns that uncertainty over Brexit could lead to higher unemployment suggests Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Recent GBP firmness has reflected solid post-Brexit vote confidence and unwinding of short positioning. More difficult and prolonged Brexit negotiations are likely to be openly discussed now that May’s government is bowing to pressure to outline what their policy actually is. This could gain greater scrutiny if, as now seems likely, the UK’s Supreme Court find in favour of a Parliamentary Act being necessary for the triggering of Article 50.”  

“Housing data has held relatively firm and also buoyed post-Brexit vote confidence. Q1 data normally show seasonal uplifts, but agent reports are not optimistic. A slide in surveys could also hit confidence.”

“BoE accommodation should persist, not only capping GBP/USD, but likely to drive it lower, towards 1.20, in Q1  2017.”