- GBP/USD remains steady near 1.3575 during Thursday’s Asian session.
- The UK’s unemployment rate has climbed to 4.7%, the highest in four years, amid economic downturn.
- Attention will be on the UK Q2 GDP report and the US PPI data for July later on Thursday.
During the Asian trading hours on Thursday, the GBP/USD pair is trading without much movement, hovering around the 1.3575 mark. Traders seem to be cautiously waiting for key economic data from both the UK and the US. The preliminary report for the UK’s GDP in the second quarter is due out later, alongside the US Producer Price Index (PPI) for July.
There have been signs of a slowdown in the US labor market, prompting expectations for several interest rate cuts by year-end, which could weaken the dollar against the GBP. Current estimates from the CME FedWatch tool indicate there’s nearly a 94% probability of a rate cut during the Fed’s September meeting, an increase from the previous 85% chance based on inflation data.
Later Thursday, traders will closely scrutinize the US PPI report. The headline PPI is anticipated to show a 2.5% rise for July, while the core PPI is expected to reflect a 2.9% increase for the same month. If the figures exceed expectations, it could influence traders to reassess Fed rate cut expectations, potentially mitigating losses for the dollar.
Recent data from the Office for National Statistics (ONS) revealed that the UK’s unemployment rate has remained steady at 4.7% for the three months leading up to June, marking its highest level since July 2021. Meanwhile, average earnings, excluding bonuses, have remained constant at 5.0% for the same three-month period.
Traders are also eyeing the UK’s Q2 GDP figures, as these may hint at the future direction of interest rates in the UK. Slower GDP growth could add further complications for Bank of England (BOE) officials, who are already grappling with rising inflation concerns.
