The British pound is down for a third straight trading day on Tuesday. In the European session, GBP/USD is trading at 1.2822, down 0.36% on the day. Earlier today, the pound fell below the 1.28 line for the first time since Aug. 15.
UK employment rate climbs to 4.3%
The UK employment report for the three months to September disappointed, as the unemployment rate shot up to 4.3%, up from 4% in the previous reading and above the market estimate of 4.1%. This was the highest level since the three months to May. Unemployment rolls climbed to 26.7 thousand, up from a revised 10.1 thousand but below the market estimate of 30.5 thousand. The BoE meets next on Dec. 19 and the jump in the unemployment rate could raise expectations for a rate cut. The next employment report will be critical, coming just two days before the BoE meeting.
There was some good news as job growth climbed 220 thousand, lower than the previous reading of 373 thousand, which was a record high. This was the fifth straight three-month period of job growth, pointing to a stable labor market.
Annual earnings, excluding bonuses inched down to 4.8%, down from 4.9% in the three months to August and higher than the market estimate of 4.7%. Wage growth is feeding services inflation, which remains much higher than the BoE’s 2% target.
A host of Federal Reserve members will deliver public remarks today and investors will be looking for clues about future rate moves. The markets have priced in a 25-basis point cut at the Dec. 18 meeting at 69% according to CME’s FedWatch. We can expect market expectations to shift if the US posts unexpected inflation or employment data ahead of the meeting.
GBP/USD Technical
- GBP/USD pushed below support at 1.2841 earlier and is testing support at 1.2814. Below, there is support at 1.2771
- There is resistance at 1.2884 and 1.2911
