Jobs Data Weakens
GBPUSD has come under fresh selling pressure today in response to weaker-than-forecast UK jobs data. The data showed that in the three months through September, the unemployment rate was seen rising to 5% from 4.8% prior, above the 4.9% the market was looking for. Additionally, the claimant count was seen rising to 29k from 25.8k prior, again coming above the 17.6k the market was looking for. Finally, average earnings were seen cooling to 4.8% from 5% both prior and expected. In all, it was a weak set of data across the board and is further strengthening traders’ expectations of a fresh BOE rate cut next month accordingly.
BOE & Autumn Budget Impact
Recent data shows that both jobs and inflation are starting to turn lower. While the BOE held rate steady at the last meeting, there was a strong dovish camp within the bank (5-4 to hold). As such, any negative data ahead of the December meeting will likely be seen as tipping the scales in favour of a fresh cut. Additionally, with the Autumn Budget ahead there is a growing view that GBP has lower to fall with the expected tax hikes seen as a hinderance to growth with weaker consumer and business spending anticipated as a result. As such, the post-budget December meeting looks increasingly likely to yield a fresh BOE rate cut, driving GBP lower.
Technical Views
GBPUSD
The recovery off the 1.30 level has run into heavy resistance at a retest of the broken 1.3177 level. This can be seen as a pivotal level for the market with risks of a deeper move lower while we hold below this level. If we break below 1.30, 1.2711 will be the deeper target for bears. However, if bulls can get back above 1.3177, focus will turn to 1.3434 instead.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.