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GBPUSD Update: Robust UK Jobs Report Bodes Well for Higher GBP

GBPUSD Update: Robust UK Jobs Report Bodes Well for Higher GBP

Justin McQueen, Strategist

GBP Analysis and Talking Points

  • The Pound rose to session highs following healthy jobs report
  • Markets are pricing in a 76% chance that the BoE will raise rates next month

See our Q3 GBP forecast to learn what will drive the currency through the quarter.

GBP Supported on Robust UK Jobs Report

GBPUSD rose to session highs after another robust UK jobs reports with the pair consolidating above 1.3250. As has been the case for several months, focus has been on the wage growth data points, which were both in line with expectations, however the weekly earnings saw an upward revision to 2.6% from 2.5%, subsequently providing a lift to the Pound. The report also showed that the labour market continues to tighten with the UK employment rate at the highest level on record at 75.7%. However, the surprise rise in the claimant count figure slightly took the shine off the report, which rose by 7.8k against expectations of a fall of 2.1k.

Overall, the UK labour market continues to show signs of strength in the economy, which bodes well for the Bank of England as they consider raising the bank rate at next month’s Quarterly Inflation Report. As it stands, OIS markets are pricing in a 76% chance of a 25bps hike to 0.75% at next month’s meeting. Focus next for GBP traders will be on the CPI and Retail Sales reports due on Wednesday and Thursday, respectively.

Bank of England Rate Hike Expectations

GBPUSD Update: Robust UK Jobs Report Bodes Well for Higher GBP

Source: Thomson Reuters

GBPUSD CHART: 1-Minute Time-Frame (Intra-day)

GBPUSD Update: Robust UK Jobs Report Bodes Well for Higher GBP

Chart by IG

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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