- The pound sterling fell to nearly 1.2800 against the US dollar following the release of weak UK employment data.
- Britain's unemployment rate jumped to 4.3% and average incomes rose faster than expected in the three months to September.
- Investors are waiting for US inflation data to guide new interest rates.
The pound fell against its major peers on Tuesday after Britain's employment data showed easing labor market conditions in the three months to September. The Office for National Statistics (ONS) reported that the ILO unemployment rate for the three months to August rose from 4.0% to 4.3%, higher than expected at 4.1%. Over the same period, UK employers added 219,000 new workers, which is lower than the 373,000 previously announced.
Signs of slowing labor demand weighed on the British currency, although not all announcements were negative for the pound. Average income data, which measures wage growth, grew faster than expected in the three months to September. Profit excluding bonuses rose 4.8%, beating expectations of 4.7% but slower than the 4.9% previously announced. Average profit, including bonuses, accelerated to 4.3%, against the expected and pre-survey value of 3.9%.
Bank of England (BoE) officials are closely tracking wage growth when determining interest rates, as it is a major driver of inflationary pressures in the services sector. The Bank of England's policy easing cycle has been slower than in other G7 countries, with rising services inflation being the main reason for this approach.
It will be interesting to see whether traders increase their bets on central bank interest rate cuts because of the slowing job market, or whether they lower them on the back of better-than-expected wage growth. Traders are now slightly leaning towards an additional 25 basis point (bp) rate cut at the December monetary policy meeting. The BoE last week cut its key borrowing rate by 25 basis points, but backed a more modest approach to policy easing.
British pound PRICE today
The table below shows the percentage change of the British Pound (GBP) against major currencies today. The British pound was the strongest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.27% | 0.34% | 0.18% | 0.19% | 0.38% | 0.18% | 0.12% | |
| EUR | -0.27% | 0.08% | -0.10% | -0.07% | 0.12% | -0.08% | -0.15% | |
| GBP | -0.34% | -0.08% | -0.16% | -0.15% | 0.04% | -0.18% | -0.23% | |
| JPY | -0.18% | 0.10% | 0.16% | 0.02% | 0.21% | 0.00% | -0.06% | |
| CAD | -0.19% | 0.07% | 0.15% | -0.02% | 0.19% | -0.01% | -0.08% | |
| australian dollar | -0.38% | -0.12% | -0.04% | -0.21% | -0.19% | -0.19% | -0.27% | |
| new zealand dollar | -0.18% | 0.08% | 0.18% | -0.00% | 0.01% | 0.19% | -0.07% | |
| swiss franc | -0.12% | 0.15% | 0.23% | 0.06% | 0.08% | 0.27% | 0.07% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select British Pounds from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box represents GBP (Basic)/USD (Quote).
A daily digest of market moves: GBP hits near three-month low against US dollar
- Sterling fell to nearly 1.2800 against the US dollar (USD) in London trading on Tuesday, its lowest level in nearly three months. GBP/USD weakens due to a slowdown in the UK job market and overall strength in the US dollar.
- The US dollar index (DXY), which measures the value of the US dollar against six major currencies, rose above 105.70, hitting a new four-month high. Decision Desk forecasts that the greenback created by Donald Trump's victory in the U.S. presidential election will increase, with Republicans now likely to control both the Senate and the House of Representatives when Trump takes office in January. The upward trend is expanding. main office.
- President Trump's protectionist trade practices and pledge to lower corporate taxes are expected to increase inflationary pressures, forcing the Federal Reserve to take a more gradual approach to policy easing. The Fed is expected to cut interest rates by 25 basis points (bp) to 4.25-4.50% at its December policy meeting, according to the CME FedWatch tool. Still, investors have recently cut back on their bets on such an outcome.
- Meanwhile, investors are awaiting Wednesday's release of October U.S. consumer price index (CPI) data and comments from a number of Fed policymakers on new interest rate guidance. Economists expect headline inflation to rise 2.6%, higher than September's 2.4% year-on-year rate. Over the same period, core CPI, which excludes volatile food and energy prices, is expected to rise steadily by 3.3%.
- Policymakers appear confident that inflation will be maintained toward the central bank's 2% target, and barring any significant deviations from consensus, they remain cautious about the Fed's monetary policy decisions in December. The impact of inflation is expected to be weak.
Technical analysis: GBP below 1.2800 with further decline expected
The British pound hit a new low against the US dollar in nearly three months, at around 1.2800. GBP/USD has extended its downside after failing to maintain its 200-day exponential moving average (EMA), which is trading around 1.2860. After breaking from the lower limit of the ascending channel, the overall trend of the cable turned negative, setting up a bearish reversal.
The 14-day Relative Strength Index (RSI) fell below 40.00, marking the beginning of bearish momentum.
On the downside, the August low of 1.2665 will provide a big cushion for GBP bulls. On the upside, the cable will face resistance near the psychological value of 1.3000.
