UK Jobs Data Weakens
GBPUSD has come under pressure today following a set of weaker-than-forecast UK labour market readings this morning. The unemployment rate was seen rising to 4.6% in the three months through May, up from 4.5% prior, back to its highest level since 2021. Average earnings also deteriorated, falling to 5.3% from 5.6% prior, below the 5.5% the market was looking for. Finally, the number of people claiming jobless support was seen rising by 33k, up sharply from the -21k reading prior, and well above the 9.5k level the market was looking for. Looking at the breakdown of the data, perhaps the most dovish signal is the 109k drop in payrolled employees, which marks the largest such drop since the covid pandemic.
BOE Rate Cut Forecasts
On the back of the data, forecasts for a further BOE rate cut in August have risen, reflected in the weaker GBP price actin we’re seeing today. Currently the market is pricing in another .25% of easing by September with a 90% chance of a follow up in December. However, if we see any further data weakness, this price is likely to see a dovish shift, fuelling further weakness in GBP. GBPUSD could see a deeper correction this week too if we get any further positive headlines on US/China trade, feeding into a stronger US Dollar.
Technical Views
GBPUSD
The latest failure atop the 1.3515 level raises the risk of a deeper correction lower in GBPUSD with heavy bearish divergence in momentum studies seen into the recent highs. Price is currently testing the local bull trend line which, if broken, opens the way for a move down to the bull channel lows with 1.3258 seen as key support to monitor if we break below 1.3463.
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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.