The British pound has edged lower in the Tuesday session. GBP/USD is currently trading at 1.3575, down 0.13% on the day.
UK employment numbers looked sharp for September. The number of payroll employees showed another monthly increase and unemployment rolls fell by 51 thousand, not as low as the consensus of -60 thousand, but a very respectable figure. Perhaps the most notable release was wage growth, which came in at 7.2% for the three months June to September.
The solid jobs report has heightened expectations that the BoE is contemplating a rate hike, perhaps as early as November. Investors may be getting a bit ahead of themselves – earlier today, ING projected that the BoE would not raise rates before May 2022. We will hear from MPC members Silvana Tenreyro and Catherine Mann on Thursday, and it will be interesting to see if either of them discusses a timeline for a rate hike. Even if the BoE does raise rates before the end of the year, the markets will be looking for signs of whether the Bank is planning a series of hikes in 2022.
On the weekend, MPC member Michael Saunders said that with inflation running above 4% and that it was “appropriate” for the markets to have priced in a rate hike earlier than previously. Saunder’s comments came just a few days after BoE Governor Andrew Bailey said that inflation needed to be reigned in and brought closer to the BoE’s target of 2.0%. The BoE is known for its caution, and these hawkish statements from senior BoE policy makers could be a trial balloon about its plans to raise rates in the near future.
There are additional key UK events on Wednesday. The monthly GDP report for August and Manufacturing Production should be closely watched, as either release could affect the movement of the pound.
GBP/USD Technical Analysis
- 1.3674 is the next resistance line. 1.3729 is next.
- GBP is putting pressure on 1.3550, a key support line. Below, there is support at the round number of 1.3400, which has held since December 2020
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.