The UK labour market data released today provided some positive insights. Employment growth exceeded expectations, and unemployment benefit claims came in lower than forecasted. This news was a welcome surprise, indicating a potentially stronger economy than previously anticipated.
Analysts from ING believe that the positive labour market data may influence the Bank of England’s decision on interest rates. It is suggested that the Bank of England might be more cautious in cutting rates compared to the Federal Reserve. The Capital Economics analysts also speculate that the Bank of England may not lower rates for a second consecutive month at the upcoming policy meeting.
Following the release of the UK labour market data, the GBP/USD pair initially experienced a bullish movement, breaking above 1.3100. However, the pair retraced back towards its initial levels, indicating a struggle for bulls to capitalize on the strong data. This retracement could also signal the dominance of bears in the market.
Technical analysis of the GBP/USD pair suggests further bearish signals. The price failed to stay above the previous high around 1.314, a bearish engulfing pattern was observed at the market’s peak, and a long upper wick appeared on the 6 September candlestick. Bulls may find support from the median of the linear regression channel, but there are concerns about the pair continuing its downward trend since late August and falling towards the channel’s lower boundary.
The future movement of GBP/USD may depend on tomorrow’s US inflation data, particularly the Consumer Price Index (CPI) figures to be released. Traders are advised to stay informed and vigilant in the market to make well-informed decisions.
While the UK labour market data showed positive signs, the overall market sentiment is still uncertain. Traders should exercise caution and closely monitor upcoming economic indicators to navigate the volatility in the forex market.