Pound sterling rebounds on strong UK employment and wage growth
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GBP rallies after upbeat labor market data
The pound sterling (GBP) rebounded sharply on tuesday after the Uk labor market data for the three months ending december exceeded expectations. The uk economy added 107k jobs, significantly higher than the 35k recorded in the previous period, while the unemployment rate remained steady at 4.4%, defying forecasts of an uptick to 4.5%.
Strong wage growth fuels inflation expectations
Wage growth remained strong, with average earnings excluding bonuses rising to 5.9%, while including bonuses, wages grew by 6%, beating expectations. This persistent wage pressure could keep inflation expectations elevated, making it harder for the bank of england (boe) to justify rate cuts in the near term.
Investors eye Uk inflation data and fomc minutes looking ahead
Traders are focusing on uk cpi data, set for release on wednesday, which could further shape expectations for the boe’s rate path. On the USD side, investors await the FOMC minutes, which will provide insights into how long the federal reserve intends to keep interest rates at 4.25%-4.50%. Any hawkish signals from the minutes could bolster the US dollar index (dxy), potentially capping gbp gains.
Trading outlook
GBP/USD is holding above the key 1.2600 level, supported by the 50-day ema at 1.2500. The RSI above 60 suggests bullish momentum, with resistance at 1.2810 (december 6 high). A break above this level could trigger further upside toward 1.2900, while downside support remains at 1.2250 (february 3 low).
The pound sterling (GBP) rebounded sharply on tuesday after the Uk labor market data for the three months ending december exceeded expectations. The uk economy added 107k jobs, significantly higher than the 35k recorded in the previous period, while the unemployment rate remained steady at 4.4%, defying forecasts of an uptick to 4.5%.
Strong wage growth fuels inflation expectations
Wage growth remained strong, with average earnings excluding bonuses rising to 5.9%, while including bonuses, wages grew by 6%, beating expectations. This persistent wage pressure could keep inflation expectations elevated, making it harder for the bank of england (boe) to justify rate cuts in the near term.
Investors eye Uk inflation data and fomc minutes looking ahead
Traders are focusing on uk cpi data, set for release on wednesday, which could further shape expectations for the boe’s rate path. On the USD side, investors await the FOMC minutes, which will provide insights into how long the federal reserve intends to keep interest rates at 4.25%-4.50%. Any hawkish signals from the minutes could bolster the US dollar index (dxy), potentially capping gbp gains.
Trading outlook
GBP/USD is holding above the key 1.2600 level, supported by the 50-day ema at 1.2500. The RSI above 60 suggests bullish momentum, with resistance at 1.2810 (december 6 high). A break above this level could trigger further upside toward 1.2900, while downside support remains at 1.2250 (february 3 low).