GBPUSD has shown a consistent upward trend over the past two months, indicating the strength of the British pound against the US dollar. However, last week, the pair encountered significant resistance at the 1.28 level, leading to a decline below 1.27, particularly influenced by robust NFP data.

During the Asian and early European sessions yesterday, GBP/USD experienced a decline but found support around the 1.2688 region, where buyers intervened. The pair also found support at the 100-day Simple Moving Average (red), which helped mitigate the drop. Subsequently, GBP/USD rebounded nearly 50 pips following this support bounce. The rally was primarily driven by a weaker US dollar, but it encountered resistance at the green moving average on the 4-hour chart, positioned at 1.27384, acting as a significant level for the pair.

GBP/USD Chart H4 – Little Changed After UK Employment

Today, the UK released the May employment report, which indicated a continued decline in job growth. The forecast predicted a decrease of 100,000 jobs in the three months to April, following a previous decline of 178,000. The weakening labor market may facilitate the Bank of England’s decision to initiate rate cuts.

UK Employment Report for May

• UK April ILO unemployment rate 4.4% vs 4.3% expected
• March unemployment rate was 4.3%
• Employment change -140k vs -100k expected
• Prior employment change -177k
• Average weekly earnings +5.9% vs +5.7% 3m/y expected
• Prior Average weekly earnings were +5.7%; revised to +5.9%
• Average weekly earnings +6.0% vs +6.1% 3m/y expected
• Prior +6.0%
• May payrolls change -3k
• Prior -85k; revised to -36k

Despite the softening labor market conditions, wage numbers have held up, contributing to concerns about persistent inflationary pressures. Real wages in the UK have now surpassed 2% for the first time since the three months to September 2021. The negative May payrolls change adds to the challenges faced by the Bank of England, as it navigates economic uncertainties and potential policy responses.

GBP/USD Live Chart