British Pound Climbs Ahead of UK Economic Data
The British pound climbed to $1.3375 on Wednesday, its highest level in two weeks, as the US dollar slumped. The sterling rally came ahead of UK economic growth data.
On Wednesday, the sterling reacted positively following remarks from US Federal Reserve Chair Jerome Powell, who hinted that more rate cuts were likely on the way.
Powell expressed concerns that the US labor market has continued to weaken even though the Bureau of Labor Statistics did not publish the September jobs numbers because of the ongoing government shutdown.
Early trading data revealed that the rise in UK unemployment had pushed pound sterling to its lowest level the previous day, traded at $1.3250. GBPUSD pair however recovered to around $1.3335 yesterday and approached $1.3375 on Wednesday
FX analysts signalled that a move above $1.3390 could target $1.3420 area which holds the 20-day moving average and the retracement of this month’s losses.
Pound is expected to face selling pressure as markets anticipate Bank of England will likely cut rate following a weak UK job report.
UK will release August gross domestic product (GDP) data on Thursday, with markets expecting a very modest expansion after mixed jobs data and other economic indicators.
The figure is expected to show a 0.1% monthly expansion. Analysts agreed that the small rise may be enough to reinforce bets that the Bank of England will hold steady at its next meeting.
The UK economy has shown signs of resilience lately, with services activity improving and consumer spending stable, but weak manufacturing continues to cap momentum.
Recent figures show a cooling labor market, with the unemployment rate rising to 4.8% and average earnings growth slowing to 4.7%. While some see this as supportive of interest rate cuts, concerns about persistent inflation are keeping policymakers cautious.
UK jobs report revealed that the number of Britons filing for jobless claims rose by 25,000 after falling by 2,000 in the previous month. The number of people in payroll fell by 10,000, a sign that the economy is not doing well.
These numbers send further signal that the UK is in a period of stagflation, which is characterised by high inflation and slow economic growth. In a statement, Bank of England’s Bailey noted that he was surprised by the weak jobs numbers. Nigeria Bonds Yield Sinks to 16% on Broad-Based Demand
