GBP – UK labor market data weighs on the British pound

The British pound weakened against the US dollar on Tuesday after data showed that the UK's unemployment rate, calculated according to International Labor Organization (ILO) standards, unexpectedly rose to 4.8% in the three months ending in August, while wage growth slowed to 4.7%, the slowest pace since May 2022. Market prices indicate that the Bank of England expects no further interest rate cuts until after March, but the probability of a December cut is around 40%. Thursday's GDP data and next week's inflation data will provide further insight into the health of the UK economy, highlighting the prospect of further BoE rate cuts.

As seen on the technical chart, the 10-day moving average has crossed below the 25-day moving average, forming a bearish crossover. The exchange rate remains capped below the 100-day moving average, currently at 1.3490. If this level is not broken, the British pound could face further downward pressure against the US dollar. The current support level is estimated at 1.3250, with the next level at 1.32 and the 250-day moving average at 1.3080. 1.30 will be another key level. Major resistance is estimated at 1.36, followed by 1.3660 and 1.3730.

Forecast range:
Resistance: 1.3490 – 1.3600 – 1.3660 – 1.3730
Support: 1.3250 – 1.3200 – 1.3080 – 1.3000

This Week's Headlines:
14/10
Bank of England Governor Bailey said the latest employment data supports his view of cooling inflation.

The UK unemployment rate, calculated according to the International Labour Organization (ILO) standard, was 4.8% in the three months ending August.
Average weekly earnings in the UK rose 5.0% year-on-year in the three months ending August.
Average weekly earnings (excluding bonuses) in the UK rose 4.7% year-on-year in the three months ending August.
The number of UK unemployment benefit claims rose by 25,800 in September from the previous month.

Focus:
Thursday
UK August GDP, Industrial Production, and Goods Trade Balance (2:00 PM)

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