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Wages Rise, Unemployment Falls
The British Pound is rallying today on the back of the latest economic data out of the UK, released this morning. The UK unemployment rate was seen falling back to 3.8% in the three months to December 2023. This marks a decline from the prior reading of 4.2% and was below the 4% the market was looking for. Additionally, wages growth was seen at 5.8% which, although down from the prior reading of 6.7%, was above the 5.6% the market was looking for.
UK CPI On Watch
Ahead of tomorrow’s keenly awaited UK CPI reading, the data has raised fears that inflation will have remained elevated last month. The uptick in CPI across December marked the first rise in 10 months and saw traders scaling back their near-term BOE rate-cut expectations. While the BOE has signalled that rate cuts are expected this year, the bank warns that it will remain data dependent and maintain rates at current levels for as long as necessary.
Bullish GBP Risks
The market reaction in GBP today suggests uncertainty ahead of tomorrow’s data. The consensus forecast is for annualised headline CPI to rise to 4.1% from 4% prior with core CPI set to rise to 5.3% from 5.1%. If seen, or exceeded, this data should keep GBP supported near-term, diluting expectations of a rate cut in the coming quarter.
Technical Views
GBPUSD
Following last week’s breakdown below the 1.2612 level, GBPUSD is now trying to reclaim the level. If bulls can hold above this level, focus will shift back to a test of the bearish trend line from 2023 highs, ahead of resistance at 1.2832, in line with rising momentum studies readings. Below here, however, 1.2437 is the next support to note.
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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.