British Pound Falls Ahead of UK Economic Report
The British pound weakened to $1.3125 as the market digested the significant rise in UK unemployment levels ahead of the economic report. The GBPUSD pair came under heavy selling pressure after UK jobs data showed further signs of labour market weakness.
On Tuesday, GBPUSD fell to almost $1.3115 and recovered to almost $1.3185, a new session high, before the end of the European session. However, selling pressure returned today, and sterling is slipping through yesterday’s low.
According to the Office for National Statistics (ONS), the UK’s unemployment rate rose from 4.8% to 5% in the three months to September, the highest level since mid-2021, exceeding expectations for a smaller rise to 4.9%.
However, UK economists questioned the reliability of the figures, citing erratic trends and problems with the Labour Force Survey.
Bank of England rate-setter Megan Greene also highlighted data complications. The pendulum of market sentiment has edged a little more toward a rate cut next month.
After jobs report, the money market has priced in a December rate cut. Meanwhile, the markets look forward to the announcement of UK economic growth on Thursday, albeit with mixed expectations.
The latest UK gross domestic product (GDP) data is due on Thursday, with consensus forecasts for no growth for September and 0.2% growth for the third quarter.
In a note, a Commerzbank analyst said there will be some relief if the data is stronger than expected. Investors now await Q3 GDP data for more clarity on growth prospects ahead of the upcoming budget announcement. UK Borrowing Crisis Makes Pension Tax Raid ‘Almost Inevitable’ -deVere
