- The pound surged against the US dollar on strong UK employment figures and a weak US producer price index.
- The UK unemployment rate unexpectedly fell to 4.2% and average incomes rose more than expected.
- Investors are awaiting UK and US inflation data for July, due on Wednesday.
During North American trading hours on Tuesday, the British Pound (GBP) broke above 1.2800 against the US Dollar (USD). The GBP/USD pair rose above 1.2800 to record a new weekly high as the US Dollar (USD) weakened following weaker than expected US Producer Price Index (PPI) data for July and an unexpected decline in the UK unemployment rate over the three months to June. The US Dollar Index (DXY), which tracks the value of the US Dollar against six major currencies, fell below the key support of 103.00.
The report said annual PPI rose 2.2%, below the expected 2.3% and the upwardly revised 2.7% from 2.6% in June. Over the same period, core PPI, which excludes volatile food and energy prices, slowed to 2.4% from the expected 2.7% and the previously reported 3%. The slowing growth in prices of goods and services at the factory level suggests either that input prices have fallen or that Federal Reserve interest rate hikes have forced households to make sharp cuts in spending. The weak PPI data will likely raise expectations that the Fed will announce a larger interest rate cut in September.
Currently, the CME FedWatch tool shows that traders see a 54.5% chance of interest rates being cut by 50 basis points (bps) in September, up from 49.5% after the release of the Producer Price Index (PPI) report but still down significantly from 68% a week ago.
The next trigger for the US dollar will be the US Consumer Price Index (CPI) data for July, due to be released on Wednesday. The US CPI report is expected to show that monthly headline and core inflation rose by 0.2%. The annual headline and core CPI are estimated to have slowed by a tenth to 2.9% and 3.2%, respectively. Price pressures in the US are expected to ease, raising hopes of a significant interest rate cut announcement by the Fed.
Daily Digest Market Trends: British Pound Beats US Dollar
- The pound surged against major currencies in New York on Tuesday after the Office for National Statistics (ONS) reported positive labor market data for the three months to June, easing market expectations of a further interest rate cut by the Bank of England (BoE).
- The agency reported that the ILO unemployment rate unexpectedly fell to 4.2 percent after economists had expected the rate to rise to 4.5 percent from the previously reported 4.4 percent.
- In addition to the improving jobs market, a slower-than-expected decline in average wages excluding bonuses is also dampening expectations for a further rate cut from the Bank of England. Average wages, a measure of wage growth that drives service sector inflation, rose faster than expected to 5.4% from the 4.6% forecast, but slower than the previous 5.7%.
- On Monday, Catherine Mann, a member of the Bank of England’s Monetary Policy Committee (MPC), warned that inflation is likely to persist. “Prices of goods and services are likely to rise again and wage pressures in the economy may take years to dissipate,” she said.
- Looking ahead, pound sterling is expected to see further volatility as UK Consumer Price Index (CPI) data for July is due to be released on Wednesday. The CPI report is expected to show that core inflation slowed to 3.4% from the previously reported 3.5%.
Today’s Pound Prices:
today british pound price
The table below shows the percentage movement of the British Pound (GBP) against the major listed currencies today: The British Pound was strongest against the Swiss Franc.
| GBP | EUR | USD | JPY | CAD | Australian Dollar | NZD | Swiss Franc | |
|---|---|---|---|---|---|---|---|---|
| GBP | 0.15% | 0.39% | 0.24% | 0.33% | 0.07% | -0.24% | 0.41% | |
| EUR | -0.15% | 0.22% | 0.06% | 0.12% | -0.11% | -0.45% | 0.19% | |
| USD | -0.39% | -0.22% | -0.16% | -0.06% | -0.32% | -0.16% | -0.03% | |
| JPY | -0.24% | -0.06% | 0.16% | 0.05% | -0.17% | -0.51% | 0.14% | |
| CAD | -0.33% | -0.12% | 0.06% | -0.05% | -0.25% | -0.59% | 0.06% | |
| Australian Dollar | -0.07% | 0.11% | 0.32% | 0.17% | 0.25% | -0.32% | 0.34% | |
| NZD | 0.24% | 0.45% | 0.16% | 0.51% | 0.59% | 0.32% | 0.66% | |
| Swiss Franc | -0.41% | -0.19% | 0.03% | -0.14% | -0.06% | -0.34% | -0.66% |
The heat map displays 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 Pound from the left column and move it along the horizontal line to US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Technical analysis: Pound surges above 1.2800
The Pound rose above 1.2800 after a positive divergence formed on the daily chart, where the pair continues to make new highs and the Momentum Oscillator is making new lows, which usually leads to a resumption of the uptrend but needs confirmation from more indicators.
The 14-day Relative Strength Index (RSI) has recovered after finding a cushion near the 40.00 level, indicating signs of buying interest at lower levels.
The pair has rebounded close to the 20-day exponential moving average (EMA), which is trading near 1.2800. If GBP/USD decisively rises above the 20-day EMA, the short-term outlook will become bullish.
On the upside, the August 2 high of 1.2840 and the 1.2900 levels will likely provide key resistance for the pound, while a drop below the August 8 low of 1.2665 could stall the recovery, exposing the June 27 low of 1.2613, followed by the April 29 high of 1.2570.
