Despite pulling back marginally GBP/EUR retains short-term upside bias and potentially targets 1.2000.
The UK’s unemployment rate fell to its lowest level in 11 years in the three months after Brexit, but a rise in benefits claimants was seen as an early warning of poor performance ahead for the labour market.
The unemployment rate fell to 4.8% in the July-September period, compared with the 4.9% consensus estimate.
The sharp increase in the number of people on benefits, however, offset the positive headline data.
The number of people claiming unemployment benefits in October rose by 9,800, the biggest rise since May, the Office of National Statistics (ONS) said.
It added the proviso that its measure of claimants had been revised up to consider changes to the benefits system.
September's claimant count increase was also revised up substantially to 5,600 from a previous reading of 700.
An increase in benefits claimants is often an early warning of future job market declines.
Earnings remained subdued at 2.3%, unchanged from their pace in the three months to August, but slightly below the 2.4% estimate.
GBP/EUR has stalled after a strong move higher based on hopes the UK would secure a better trade deal with Donald Trump, or that political instability in the Eurozone might see the EU’s hard line soften in Brexit negotiations.
The short-term trend remains bullish and likely to extend.
Strong support just below the current exchange rate from the R1 monthly pivot at 1.1585 is also likely to act as a prevention to further downside.
The bullish MACD momentum indicator in the lower pane has just moved above its zero-line, indicating more upside it probably in the pipeline.
A break above the 1.1664 highs would probably confirm a continuation up to 1.1800, followed by 1.2000.