Pound yawns as job numbers impress

The British pound has barely made a peep so far this week. Currently, GBP/USD is trading at 1.3689, up 0.10% on the day.

Employment data beats forecast

UK job numbers ended the year on a high note, as all three employment indicators beat the consensus estimate. Wage growth climbed 3.6% in the September-November period on an annual basis, up from 2.7% and its highest level in a year. This was up sharply from 2.7% and well above the estimate of 2.9%. Claimant Count Change dropped to 7 thousand in December, down from 64.3 thousand beforehand and below the forecast of 47.5 thousand. The unemployment rate nudged up from 4.9% to 5.0%, but managed to beat the estimate of 5.1%.

Investors did not give the pound a thumbs-up today, despite the strong numbers. The unemployment rate may have soured the mood, as the rate rose to the symbolic 5 per cent level for the first time since 2016, and also marked a fifth straight increase in unemployment. There is also some question about the accurateness of this figure – in December, BoE Governor Bailey stated that he believed that the actual unemployment rate was higher, since the official release excludes job seekers who have stopped looking for work due to Covid-19.

Fed expected to reiterate dovish stance

The Federal Reserve holds its first policy meeting of the year on Wednesday, and Fed Chair Powell & Co. are expected to reiterate a dovish message to the markets. If the rate statement or follow-up press conference sound too dovish for the market’s taste, the US dollar could lose ground. Conversely, if Powell firmly put to rest talk of tapering in his post-meeting remarks, the US dollar short squeeze could resume. The Fed has been pleading for further fiscal support from the government for months, and it looks like Powell will have a close ally in Janet Yellen at Treasury.

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GBP/USD Technical

  • GBP/USD faces resistance at 1.3777. Above, there is resistance at 1.3875
  • There is support at 1.3533, followed by support at 1.3423
  • The 50-day moving average (MA) is situated at 1.3477

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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