UK Unemployment

The ILO Unemployment Rate released by the National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate is up, it indicates a lack of expansion within the U.K. labor market. As a result, a rise leads to weaken the U.K. economy. Generally, a decrease of the figure is positive (or bullish) for the GBP, while an increase is negative.

Nov 13 09:30 GMT 7.7% Consensus 7.7% Previous

UK’s unemployment rate for June to August 2013 was 7.7 percent of the economically active population, unchanged from the previous month and down 0.1 percentage points from March to May 2013. Youth unemployment was unchanged at 21.0 percent.

Trading the figure

Carney has stressed that the 7% unemployment figure is not a trigger for reduction in their monthly £375 billion GILT purchases. Regardless of this, I believe that the GILT will react strong negative to a low figure. Clear trade below 7.5%, as there are two factors pushing the GILTs lower..

1. Reduction in bond purchases reducing demand

2. Risk off trade

So for a figure below the anticipated 7.6, I expect a large and sustained move to the downside and will look to get short and stay short till target 108.98.

Should the figure come out a miss, 7.8 or higher, there will obviously be an algo move to the upside but I am not confident that there will be sustained re-adjustment and will look to fade should the price reach 11195 or higher.

Result

Headline figure came out as 7.6%, this was just outside my trading range, but the GILT solidly came off 20 ticks. This was a good opportunity missed, potentially need to narrow ranges in the future. GILT will be very sensitive to unemployment at the moment.

Market Reaction

Had I been more aggressive, would have been able to get entry into the GILTs and would have taken profit.