GBPUSD falls 0.91% as UK labor data presents mixed signals

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.91%	-117.4 Pips
Week to-date	-1.36%	-175.6 Pips
November	-1.21%	-156.3 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Thu 01:30 PM USD PPI excluding Food and Energy sectors (12-mth)
Thu 08:00 PM USD Federal Reserve Chair Jerome Powell speech

What happened lately

In the United Kingdom, the labor market data for October and September presented mixed signals. The Claimant Count Rate remained steady at 4.7% in October, consistent with September figures, as reported by the Office for National Statistics. The Claimant Count Change showed a slight improvement, decreasing from 27.9K in September to 26.7K in October. On the earnings front, there was a divergent trend between wage growth with and without bonuses. The Average Earnings including Bonus for the three months ending in September rose significantly to 4.8%, up from a revised 3.9% in August. However, when excluding bonuses, the average earnings saw a decline to 4.3% from 4.9%. A concerning aspect was the U.K. ILO Unemployment Rate, which increased to 4.3% from 4% over the same period. The U.K. Labour Force Survey Employment Change showed a reduction from 373K in August to 219K in September.

These economic indicators collectively provide a complex narrative for the U.K.’s economic outlook. The rise in unemployment and the drop in employment change signal potential softening of the labor market. Meanwhile, the increase in average earnings including bonuses suggests upward pressure on wages, which could contribute to inflationary concerns if sustained. However, the variance between the ‘with’ and ‘without’ bonus figures can depict varying consumer purchasing power dynamics, influencing economic growth.

For the GBPUSD currency pair, the recent data has not been favorable. The drop on Tuesday by -0.91% to 1.27415 reflects the market’s reaction to the uncertainties highlighted by the economic figures. Traders likely weighed the implications of rising unemployment and less robust employment growth combined with upcoming high-impact U.S. events such as USD CPI Inflation Rate and Federal Reserve Chair Jerome Powell’s speech. These factors might have sparked concerns over future monetary policy stances, triggering a negative outlook for GBP against USD in the short term. Currency traders might remain cautious towards GBP, given the mixed economic signals and the potential for significant developments from U.S.-focused financial news which could dictate the pair’s direction in the coming days.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday dropped -0.91% to 1.27415. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for GBPUSD looks bearish as the pair posted lower in Tuesday trading session.

Looking ahead for the day, immediate support level is at S1 1.26824 with break below could see further selling pressure towards S2 at 1.26233. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 1.28734 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 1.27188 would indicate selling pressure.

For the week to-date, take note that GBPUSD is bearish as the pair posted lower by -1.36%.

Key levels to watch out:

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