UK labour market data at 07:00: why average earnings usually matter most

[FXS London Scalper]

The UK labour market release comes out at 07:00 London, an hour before the cash open. It includes the unemployment rate, payroll employees, vacancies and average earnings, and the market doesn't weigh them equally.

For sterling, the number that usually matters most for GBPUSD is regular pay growth, meaning average weekly earnings excluding bonuses. The Bank of England watches it as a guide to domestic inflation pressure, so a surprise there changes rate expectations directly.

A routine for those mornings:

• Flat in GBP pairs from 06:50. Liquidity at 07:00 is thin and spreads widen a lot.
• Compare regular pay with consensus. A useful log is the surprise size in percentage points against the GBPUSD move in the first half hour; over a few releases it shows what size of surprise really moves the pair.
• Check the two-year gilt yield. If it confirms the move, the London open is more likely to continue it.
• Ignore the headline unemployment rate unless it surprises a lot. Data quality issues in the survey have made it less trusted.

Do others weigh the components the same way, or does the payroll figure matter more for you?