Pound Gains on Stable UK Jobs Data, Traders Eye CPI.
Pound Rises on Stable UK Jobs Report.
FUNDAMENTAL OVERVIEW:
The British Pound (GBP) strengthened against major counterparts on Tuesday, climbing to its highest level in over two months versus the US Dollar following the release of the UK’s labor market data for the three months to July. The Office for National Statistics (ONS) reported that the unemployment rate held steady at 4.7%, a four-year high, in line with expectations. During the period, the UK economy added 232K jobs, broadly matching forecasts of 220K and slightly below the previous 239K.
Wage growth showed mixed trends: average earnings excluding bonuses rose 4.8% annually, as anticipated but slower than June’s 5%, while average earnings including bonuses advanced 4.7%, marginally above the prior 4.6% and in line with forecasts. These figures suggest resilience in the labor market, offering some reassurance to Bank of England (BoE) policymakers who had cautioned about mounting employment risks. Earlier this month, Governor Andrew Bailey noted he was “more concerned about downside job risks” compared with other Monetary Policy Committee (MPC) members who opted to leave rates unchanged in August.
Looking ahead, traders expect heightened volatility in Sterling as key events approach: the August Consumer Price Index (CPI) data on Wednesday and the BoE’s policy decision on Thursday. Inflation is projected to tick higher, with headline CPI forecast at 3.9% year-on-year, up from 3.8%. A stronger-than-expected reading could reinforce expectations that the BoE will maintain its benchmark rate at 4%.
GBP/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
GBP/USD is trading within an up channel.
GBP/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in Bullish Zone, while the Stochastic oscillator suggests Positive trend.
Immediate Resistance level: 1.3689
Immediate support level: 1.3577
HOW TO TRADE GBP/USD
After an initial spike, the GBP/USD pair pulled back to test a key support level. It then rebounded, breaking through its previous resistance. The pair is now trading above that level, and if it can hold this support during the current pullback, it might continue its climb towards a higher resistance level.
