Gbpusd rises as UK labor market shows mixed signals

GBPUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.54%	66.8 Pips
Week to-date	1.45%	176.4 Pips
January	-1.61%	-202.2 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In the United Kingdom, the labor market showed mixed signals based on the recent data from the Office for National Statistics. The Claimant Count Rate in December remained unchanged at 4.6% from the previous month, indicating stability in the number of jobless claims. However, the Claimant Count Change increased to 0.7K from a revised -25.1K, suggesting a slight rise in benefit claims. On a more positive note, Average Earnings, both including and excluding bonuses, for the three months ending in November, increased to 5.6%, from 5.2% in October. This improvement in average earnings reflects better wage growth, potentially leading to increased consumer spending power.

Despite the growth in wages, the ILO Unemployment Rate for the same period rose slightly to 4.4%, up from 4.3% previously. Additionally, the Labour Force Survey Employment Change showed a significant drop to 35K in November from October’s 173K, hinting at a slowing employment growth. These figures highlight a labor market that, while experiencing wage growth, is also confronting a slight upswing in unemployment and decelerating job creation.

The recent economic data from the UK could potentially impact the GBPUSD exchange rate. With average earnings on the rise, consumer spending power is likely to improve, providing support for the GBP. However, the increase in both unemployment rate and claimant counts signals underlying concerns within the broader labor market. As a result, while the initial reaction in the forex market saw the GBPUSD rise by 0.54% to 1.23474, sustained growth depends on how these opposing economic facets are interpreted by traders and investors. The absence of major economic events today suggests market movements will primarily respond to existing data trends and developments within global economic contexts. As traders digest mixed indicators, the pound may face volatility until clearer signals about the economy’s direction materialize.

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What can we expect from GBPUSD today?

GBPUSD on Tuesday rose 0.54% to 1.23474. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for GBPUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.23952 with break above could target R2 at 1.2443 or figure level area. While towards the downside, we are looking at daily low of 1.22288 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.23598 may suggest continuation after recent positive movement.

For the week to-date, take note that GBPUSD is bullish as the pair continued to trade higher and is up by 1.45% over the past few days.

Key levels to watch out:

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