- UK wage growth, excluding bonuses, cooled in September.
- The UK unemployment rate rose to 4.3% after a previous reading of 4.1%.
- Sterling lost 1.1% of its value on the Trump trade.
GBP/USD price analysis points to a weaker UK labor market, raising expectations for a BoE rate cut. At the same time, the pair is falling as Trump’s trade rally continues.
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Data on Tuesday revealed that UK wage growth, excluding bonuses, cooled and unemployment rose. In September, the unemployment rate rose to 4.3% after a previous reading of 4.1%. Meanwhile, jobless claims rose from 10,100 to 26,700. The labor market drives a significant part of the economy.
Therefore, the weakness in this sector is a big motivator for the Bank of England to continue to reduce borrowing costs. However, the recent government budget has increased the chances of a spike in inflation, which could make policy makers cautious.
On the other hand, the strength of the dollar since Trump won the US election has put downward pressure on the GBP/USD pair. Sterling lost 1.1% of its value on the Trump trade. The new US president has proposed policy changes to boost the US economy in the long term.
Greater reductions in taxes and duties on imported goods will benefit local businesses, fueling the economy. If that happens before inflation reaches its 2% target, the Fed may be forced to pause rate cuts and assess the situation. A cautious or hawkish reversal will be bullish for the dollar.
Meanwhile, traders are holding their breath ahead of October’s inflation numbers, which will shape the outlook for the Fed’s December meeting.
GBP/USD key events today
No key events will follow the UK employment data. Therefore, traders will be waiting for tomorrow’s US inflation report.
GBP/USD technical price analysis: The downtrend continues after a brief pause
From the technical side, GBP/USD price broke below the 1.2850 support level to make a lower low. Moreover, it made a strong swing below the 30-SMA, a sign that the bears are in the lead. Meanwhile, the RSI is trading near the oversold region, indicating solid bearish momentum.
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Initially, the price was in a downtrend before pausing to consolidate between support at 1.2850 and resistance at 1.3000. Therefore, a break below the band’s resistance signals a continuation of the downtrend.
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