GBP/USD Remains Supported Despite Lower UK Average Earnings

GBP/USD turned bullish in the final months of 2023, reversing at 1.20 lows and gaining more than 7 cents from the bottom to the top which it reached in late December. However, in the first two weeks of 2024, this pair has been consolidating above 1.26 and moving averages are providing support.

GBP/USD Daily Chart – Quick Rebound to the Top

GBP/USD witnessed strong demand in the last two months of last year as the USD fell on dovish Fed comments, suggesting that rate cuts are coming soon. The FED is now planning to start easing the monetary policy in March after the December meeting statement, which gave this pair another boost to the upside.

Despite the UK economy’s weakening trend, this pair has continued to show resilience since early November, and it continues to remain bullish overall, with buyers targeting the 1.30 level and moving averages providing support on different timeframe charts. As a result, we decided to open a buy GBP/USD signal at the 100 SMA (green) yesterday which was acting as support on the H4 chart.

Today we had the employment report from the UK, with the unemployment rate expected to remain unchanged at 4.2%, while the Average Earnings Index 3m/y was expected to decline by 4 points, from 72% to 6.8%.

UK December Employment Report

• December payrolls change -24k vs -13k prior
• November payrolls were -13k; revised to 9k
• November ILO unemployment rate 4.2% vs 4.2% expected
• October ILO unemployment rate was 4.2%
• November employment change 73k vs 50k expected
• October employment change was 50k
• November average weekly earnings +6.5% vs +6.8% 3m/y expected
• Prior +7.2%
• November average weekly earnings (ex. bonus) +6.6% vs +6.6% 3m/y expected
• Prior +7.3%; revised to +7.2%

GBP/USD Live Chart