Earlier today the British Pound came under pressure, weakening to the $1.35 against the greenback as a fresh bout of labour market data showcased a notable slowdown reinforcing bets from money markets that the BoE will be inadvertently forced to reduce its policy rate further to avoid the knock-on effect on the nation’s growth.
More specifically the unemployment rate has risen to its highest level since 2021, recording a tenth of a percent rise to the 4.6% level and claimant counts change, the number of people who file for unemployment benefits, rose to 33k, above market expectations and materially higher than last month’s -21k reading
Moreover, average earnings with and without bonuses fell to 5.3% and 5.2% respectively, veering closer to levels once seen before in November of 2024, with the fall attributed to increases in payroll taxes stemming from the impact of the hike in National Insurance Contributions.
Likewise, job growth eased to its lowest levels this year, marking the smallest gain, as the UK economy managed to only add 89k new jobs following a 112k new additions of the prior month.
Even though, the odds for a rate cut at next week’s meeting have not materially changed, money markets bet that the central bank will slash its policy rate by 25bps in August to counter the adverse effects.
Technical Analysis
GBPUSD Chart – The Pound falls under pressure after a weaker than expected employment market update
Resistance: 1.3630 (R1), 1.3800 (R2), 1.4000 (R3)
Support: 1.3440 (S1), 1.3250 (S2), 1.3050 (S3)