As the British pound slumped to a seemingly untenable 31-year low after the announcement of the EU referendum result, you would have been forgiven for thinking that the UK was about to sink into a prolonged period of recession. While the economy remains far from buoyant two months on, however, it has rebounded slightly and created more cause for optimism among businesses, traders and household alike.
In fact, recent economic developments have embodied that challenge facing the UK in the wake of the Brexit vote. After a sharp decline was followed by a sustained recovery, we have since seen considerable volatility as the UK’s immediate and long-term futures remain in doubt. The FTSE has endured some torrid trading sessions in recent weeks, for example, before regaining its composure and perpetuating a cycle of sharp peaks and plunging troughs.
What do the recent employment figures mean for a post-Brexit market?
Some economic data-sets have performed far better than others in the wake of the Brexit vote, however, as while the GBP has generally struggled the labour market has displayed unexpected and robust strength. This was evident as the UK claimant count declined suddenly during the last month, as the number of those in receipt of Jobseeker’s Allowance and Universal credit fell by 8,600. This left July’s figure at 764,000, which is relatively healthy when you consider the wider state of the economy in the UK.
This represented the first fall in five months, and it confirmed that the job market in Britain is rebounding at a faster rate than any other niche post-Brexit. It also confounded experts, who has predicted a slight decrease closer to 5,900 as the UK economy continued to display sluggish growth metrics. While it would be unwise to suggest that recent labour market growth is indicative of a glorious, post-Brexit era for the UK, it at least hints at a slight recovery and offers some security for financial market traders nationwide.
Immediately after the news broke, reputable brokers begun reporting that the value of the British pound immediately lifted to $1.3058. Although this rapidly declined again amid wider uncertainty and strong US data releases, sustained growth in the labour market has the potential to counter-balance these issues and boost investors. This could prove crucial in the months ahead, as traders and investors look to thrive amid growing uncertainty over Britain’s long-term future and the time-scale for triggering Article 50.
The Last Word
For now, and the foreseeable future at least, the British economy and financial marketplace will continue to endure significant volatility. This will persist for as long as the post-Brexit climate continues to shift, making it hard for investors to thrive. Make no mistake; however, recent labour market growth will offer a chink of light and stability if it can be maintained, while it may even have the potential to leader a larger and more tangible recovery.