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British Pound (GBP) Latest: GBP/USD Slipping After UK Unemployment Data

British Pound (GBP) Latest: GBP/USD Slipping After UK Unemployment Data

Martin Essex, MSTA, Analyst

GBP price, news and analysis:

  • The UK unemployment rate dipped to 5% in January from 5.1% the month before rather than rising to 5.2% as analysts had predicted.
  • There was little impact on GBP, with GBP/USD trading sideways around the 1.3840 level, but it has since eased back.
  • There may be more reaction to Wednesday’s UK inflation report, which is expected to show a small rise in the year/year headline rate.
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GBP/USD stable after better-than-expected UK employment data

The UK unemployment rate fell unexpectedly to 5% in January from 5.1% the month before, wrong footing analysts polled by the news agencies who had predicted an increase to 5.2%. However, there was little response in GBP/USD, which continues to trade below resistance at 1.40.

Note, though, that the price has fallen below the 50-day simple moving average that has supported it – except for a couple of blips – since early November last year. This could be a negative signal, although there is no sign yet of the pair breaking lower.

GBP/USD Price Chart, Daily Timeframe (July 31, 2020 – March 23, 2021)

Latest GBP/USD price chart.

Source: IG (You can click on it for a larger image)

Looking at the labor-market report in more detail, employment fell by less than expected while average earnings including bonuses edged ahead to 4.8% but the rise was also less than forecast. The numbers, though, are from earlier in the year, which is perhaps why there was little reaction in the FX markets.

UK unemployment.

Source: DailyFX calendar

Of more interest to the markets, perhaps, will be Wednesday’s UK inflation report that is forecast to show a small increase in the headline rate year/year but no change in the core rate.

UK inflation.

Source: DailyFX calendar

If the inflation rate is less than expected that could prompt losses for GBP/USD and it is worth noting that IG client sentiment data are also suggesting a bearish outlook for the pair.

--- Written by Martin Essex, Analyst

Feel free to contact me on Twitter @MartinSEssex

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

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