Pound falls to 6-week low on soft job numbers

The British pound has recorded considerable losses on Wednesday and fallen below the 1.38 line. Currently, GDP/USD is trading at 1.3775, down 0.63% on the day.

British unemployment claims jump

The UK released a mixed employment report earlier on Tuesday. In February, claims jumped to 86.6 thousand, compared to the forecast of 9.0 thousand. This was the highest claim count since July. The unemployment rate dropped to 5.0% in January, down from 5.1% beforehand and below the 5.2% expected. There was more positive news from wage growth, which accelerated for a seventh successive month, with a strong gain of 4.8%. Still, investors preferred to focus on the disappointing claimant count and sent the pound to its lowest level since early February.

The pound is also under pressure this week from a vaccine spat with the EU. A shortage of AstraZeneca vaccines across Europe has resulted in a threat by the UE to block shipments of the vaccine to the UK. The irony in this situation is that due to the blood-clot scare over the vaccines, Europeans may be reluctant to take the jabs at a time when the EU is busy trying to hoard vaccines and hold up exporting the shots to the UK and elsewhere.

A busy week for UK events continues on Wednesday, with the release of inflation data (7:00 CPI). Headline CPI is expected to rise from 0.7% to 0.8%, while Core CPI is projected to remain at 1.4%. The UK vaccination rollout has been proceeding nicely, and with the UK expected to ease lockdown restrictions next week, an increase in economic activity should translate into inflation continuing to pick up speed.

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GBP/USD Technical Analysis

  • 1.3889 has strengthened in resistance, as GBP/USD has declined considerably
  • GBP/USD is testing support at 1.3782. Below, there is support at 1.3699

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.