During yesterday's trading, the British pound was softer against the euro and the US dollar after the release of wage data in the United Kingdom, which indicates that the British Labor market continues to slow and will help reduce inflation in the coming months, in line with the thoughts of the Bank of England. The gains of the British pound against the US dollar (GBP/USD) did not exceed the level of 1.2216 before settling down again around the support level of 1.2165 at the time of writing the analysis.
Data Came Out from Great Britain
The Office for National Statistics stated that wages in Britain, including incentives, rosed by 8.1% on an annual basis until August, which was lower than expectations of 8.3% and below the 8.5% in July. The result includes one-off payments to some NHS workers, which will be reduced from upcoming releases, and therefore suggests a further easing in pay pressures in the future.
However, wages without bonuses rose by 7.8%, which was expected. Meanwhile, the Office for National Statistics has postponed the release of UK unemployment figures until October 24, limiting the market-moving potential of the economic release. Moreover, falling wage figures are likely to be the main story, given their impact on inflation, and the key point here is that the UK Labor market is declining. As Commenting on the numbers, Samuel Tombs, chief economist at Pantheon Macroeconomics, said: “Wage growth is slowing fast enough for the Monetary Policy Committee to keep interest rates at 5.25% next month.”
Furthermore, George Vesey, senior Forex analyst at Convera, says: “Markets rely exceptionally on data, and react sharply to economic or inflation numbers that are not in line with expectations, hence the negative reaction of the British pound to the sign of a slowdown in the Labor market.” The pound weakened mostly due to markets downgrading economic growth expectations. “The Bank of England raises interest rates.” Accordingly, With the bank opting last month to keep interest rates at 5.25% in the face of falling inflation, these data, along with figures postponed to next week, will play an important role in the interest rate decision on November 2.
Finally, one measure of Labor market performance that was not affected by the Office for National Statistics delay was the pay measure, which fell slightly in September for the third month in a row.
GBP/USD Forecast Today
According to the performance on the daily chart below, the general trend for the GBP/USD currency pair is still bearish, and a reversal of the trend will not occur over that period without moving towards the resistance levels of 1.2330 and 1.2465, respectively. On the other hand, as I mentioned before, stability around the support 1.2150 will remain supportive of a stronger move for the bears, and the psychological support will be 1.2000.
The GBP/USD will be affected today by the announcement of British inflation numbers, then US housing numbers, and most importantly, statements by some US Federal Reserve policy officials.
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