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British Pound (GBP) Price Outlook: GBP/USD to Drift, UK Jobs Data Mixed

British Pound (GBP) Price Outlook: GBP/USD to Drift, UK Jobs Data Mixed

Martin Essex, MSTA, Analyst

GBP price, news and analysis:

  • GBP/USD will likely continue to trade close to the 1.32 level ahead of Thursday’s monetary policy announcement by the Bank of England, unaffected by the latest UK employment figures.
  • Those showed that 257,000 people were added to company payrolls last month, the most since records began in 2014.

GBP/USD to drift ahead of Bank of England

GBP/USD will likely remain close to the 1.32 mark ahead of the Bank of England’s monetary policy announcement Thursday. With the Omicron coronavirus variant spreading in the UK, and new restrictions on the way, it now seems probable that the BoE will leave Bank Rate unchanged, rather than increasing it as had once seemed to be on the cards.

GBP/USD Price Chart, One-Hour Timeframe (November 26 – December 14, 2021)

Latest GBP/USD price chart

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

UK payrolls rise

In the news, UK employment data released Tuesday showed that 257,000 people were added to company payrolls last month, the most since records began in 2014. That suggests UK businesses have largely survived the ending of the Government’s furlough scheme but the numbers will probably be ignored by the BoE, which now looks set to delay any tightening of monetary policy until next year. Meanwhile the data also showed a falling unemployment rate but a smaller than forecast increase in employment.

UK jobs data.

Source: DailyFX calendar

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The Bank will also likely ignore Wednesday’s UK inflation figures, with the consensus forecast an increase in the core rate to 3.7% year/year in November, up from the previous 3.4%.

Retail trader data bearish GBP/USD

Turning to the IG client positioning numbers, retail trader data show 75.83% of traders are net-long GBP/USD, with the ratio of traders long to short at 3.14 to 1. The number of traders net-long is 9.67% higher than yesterday and 10.77% higher than last week, while the number of traders net-short is 5.13% lower than yesterday and 7.72% lower than last week.

Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD may fall. Moreover, traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger GBP/USD-bearish contrarian trading bias.

-- 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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