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UK labour market shows sign of recovery, but could hold a bullish BoE

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Jobs scheme ends in September 

Helpful article here from ING. They note the following: 

 

Jobs are rising in the UK as a recovery sets in:

Jobs scheme ends in September However, the key test for the UK jobs market is the end of the UK furlough scheme in September.  This will be when the the end to wage subsidies occur. 

The key point that ING note is”

One of the lessons from last autumn was that firms will take action weeks before the formal end of support, if they believe they won’t be able to viably support workers back to their role. Redundancies peaked in mid-September 2020, six weeks or so before the 31 October when wage support was originally slated to end.

So, the current extension of restrictions is due to be extended until July 19. As things stand that should allow the space for the job market to continue without workers being laid off. However, the timing of this is one factor to watch for the GBP’s continued recovery going forward. This is also one factor that could restrain BoE optimism today and is a key counter argument to my long bias. However, I was long from last week in EURGBP and GBPCHF early this week, so have the space. 



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