UK Jobless Rate Falls

The British Pound is rallying today on the back of the latest UK economic data this morning. The jobless rate was seen falling back to 4.2% from 4.4% prior, marking a 2 and a half year low, well below the 4.5% the market was looking for. The data follows positive GDP and retail sales data recently, adding to a better outlook for the UK economy.  Alongside the unemployment rate, wage growth was seen falling sharply to 4.5% from 5.7% last, below the 4.6% the market was looking for. With wages falling and the jobs market growing tighter, the consensus now is for the BOE to hold rates steady through September before cutting further in November.

BOE Easing Expectations

Following the BOE rate cut earlier this month there has been plenty of speculation regarding how quickly the bank is likely to cut rates. While inflation has fallen steadily back to target, other leading indicators have been trending higher, reflecting a better economic backdrop in the UK. With that in mind, the bank is expected to exercise caution as it moves away from post-pandemic tightening.

UK CPI Up Next

Looking ahead, focus will be on the latest UK CPI reading tomorrow. The market is looking for an uptick to 2.3% from 2% prior. If seen, the data should further endorse the view that the bank will remain on hold through September, keeping GBP supported near-term.

Technical Views

GBPUSD

The sell off in GBPUSD has stalled for now, with price reversing higher ahead of testing support at 1.2612. The market is now retesting the underside of the broken bull channel and the 1.2832 level. With momentum studies bullish, focus is on fresh push higher if bulls can get back above this zone.