The British pound started the week quietly. GBP/USD is trading at 1.2718 in the North American session at the time of writing, down 0.03% on the day.
UK job growth is expected to shrink
The United Kingdom publishes the May employment report on Tuesday. UK job growth has been contracting for some time and the trend is expected to continue in May. Job growth is expected to fall by 100,000 in the three months to April, after a drop of 178,000 in the previous release.
The weaker labor market will make it easier for the Bank of England to start cutting rates, but wage growth remains high and that is fueling inflation. Wage growth is expected to rise to 6.1% in the three months to April, up from 6% in the three months to March. Although the overall trend for wages has been downward, it is still uncomfortably high for the BoE. Markets have not fully priced in an initial rate cut until November, although a rate cut in June or August is possible.
Friday’s US payrolls report showed that the US labor market is in good shape despite the heavy weight of high interest rates. Non-farm payrolls in May rose to 272,000, beating the market estimate of 185,000 and much stronger than the revised gain of 165,000 in April. Wage growth accelerated in May and was also higher than expected. Surprisingly, the unemployment rate climbed to 4%, up from 3.9% in April and above the market estimate of 3.9%.
The strong jobs numbers have helped cushion the impact on the economy of higher rates and that has kept inflation stubbornly high. According to CME’s MarketWatch, the odds of a quarter-point decline in September have fallen to 46%, down from 51% just a week ago. There is virtually no chance of a rate cut at this week’s meeting.
GBP/USD Technical
- GBP/USD previously tested 1.2688 in support. Below, there is support at 1.2654
- 1.2750 and 1.2784 are the next resistance lines
The content 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 Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you wish to reproduce or redistribute any of the content found on MarketPulse, an award-winning forex, global commodities and indices service and news site service produced by OANDA Business Information & Services, Inc., please use the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to learn more about the pulse of global markets. © 2023 OANDA Business Information & Services Inc.
#GBPUSD #steady #ahead #jobs #data #MarketPulse
Image Source : www.marketpulse.com