GBP/USD exchange rate ticks up following UK labour data
The pound US dollar (GBP/USD) exchange rate is firming this morning following the publication of the UK’s latest employment data.
At the time of writing the GBP/USD exchange rate is trading at around $1.3096, up roughly 0.2% from this mornings opening rate.
Pound (GBP) to firm following GDP?
The pound (GBP) is edging higher against the majority of its peers this morning following the publication of the UK’s latest labour data.
The latest unemployment rate in the UK dropped to 4.1% in July, down from 4.2%, while average earnings (excluding bonuses) cooled less than expected in the same time period, slipping from 5.4% to 5.1% rather than an expected 4.9% reading.
However, despite signs of persistent wage growth, the pound was able to catch bids as markets continued to price in a Bank of England (BoE) interest rate hold at next week’s meeting.
Richard Carter, Head of Fixed Interest Research at Quilter Cheviot, commented:
‘The Bank of England’s next interest rate decision is now just over a week away, and today’s data, alongside the inflation and GDP prints due out before it meets, will no doubt play a major role in whether it opts to reduce rates further or hold for now.
Markets have been pricing in a more aggressive path of rate cuts in the US than the UK, and unless something remarkable appears in either of these prints it is unlikely we will see this change.’
Looking ahead, GBP exchange rates could tick up on Wednesday following the publication of the UK’s latest GDP reading.
July’s index is forecast to report that the British economy grew by 0.2%, and could see Sterling sentiment buoyed should the data match expectations.
US dollar (USD) to be undermined by domestic inflation?
The US dollar (USD) is struggling to garner investor attention this morning as an absence of domestic data releases sees the ‘greenback’ fail to find a clear trajectory.
Further undermining USD exchange rates this morning is a mixed market mood which has seen the safe-haven currency unable to capitalise on risk sentiment.
Looking ahead, the US dollar will likely experience significant volatility on Wednesday following the publication of the US’s latest consumer price index.
Should the data report that headline inflation cooled in line with market expectations in August, this will likely ramp up bets for a 50 basis-point interest rate cut from the Federal Reserve, and could hobble the American currency as a result.
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