GBPUD Bounces Off 1.26 As UK Employment Improves
GBPUSD Bounced from the 1.26 level yesterday, however it remains on a larger bearish trend as UK economy remains weak, confirmed by the employment numbers this morning.
After a steep decline of over 10 cents in the previous two months, GBP/USD saw a recovery in late November but faced strong resistance near the 1.28 level, where multiple moving averages acted as a barrier. This pause in upward momentum formed a doji candlestick on the weekly chart, signaling potential reversal risk.
Sellers capitalized on this setup last week, pushing the pair down by 2 cents to close at 1.26, reinforcing the ongoing bearish trend. Yesterday, the pound saw a brief bounce as the UK services PMI rose to a two-month high of 51.4 points, reflecting modest resilience in the services sector. Despite this improvement, broader economic conditions remain challenging.
GBP/USD Chart Weekly – MAs Rejected the Price
Manufacturing Output dropped to 45.7 points, marking an 11-month low and highlighting ongoing struggles in the sector. Additionally, the ONS reported weaker-than-expected GDP data for October 2024, with monthly GDP contracting by 0.1%, falling short of the forecasted 0.1% growth and matching the previous month’s decline. These figures underscore the continued fragility of the UK economy.
Today’s UK labor market for October was upbeat, revealing steady unemployment at 4.3%, but strong employment gains of 173k, far exceeding expectations. Wage growth accelerated, with average weekly earnings (both including and excluding bonuses) rising by 5.2%, signaling continued upward pressure on pay. However, November payrolls showed a decline of 35k, highlighting potential early signs of softening in the jobs market.
UK Employment Report for October by ONS – 17 December 2024
Real wages in the UK
- UK October Unemployment Rate:
- Held steady at 4.3%, matching expectations.
- Previous rate was also 4.3%.
- Employment Change:
- Increased by 173k, significantly surpassing the expected 2k.
- Previous figure was 219k.
- Average Weekly Earnings (Including Bonus):
- Rose by +5.2%, higher than the +4.6% expected.
- Previous figure revised from +4.3% to +4.4%.
- Average Weekly Earnings (Excluding Bonus):
- Grew by +5.2%, slightly exceeding the +5.0% forecast.
- Previous figure revised from +4.8% to +4.9%.
- November Payrolls Change:
- Declined by -35k.
- Previous figure revised upward from -5k to 24k.
November’s payrolls indicate a notable drop. However, this follows an upward revision to the October data, which offsets some of the decline. The standout detail in the report is the sharp rise in wage growth, which could become a concern for the Bank of England if this trajectory persists. That said, the ONS still faces challenges in refining its data, as the underlying figures remain inconsistent and unreliable.
GBP/USD Live Chart
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