GBP/USD demonstrated remarkable resilience, maintaining its position above the 1.2700 mark during the European session on Tuesday, even in the face of a mixed batch of employment data from the UK. The Office for National Statistics (ONS) reported an Employment Change of -140,000 for the three months ending in April, which did impact the Pound Sterling’s strength, but not enough to shake the stability of GBP/USD.
The pair struggled earlier in the week but managed to rebound and stabilize above 1.2700. However, the technical outlook still suggests a lack of recovery momentum.
UK Employment Data Analysis
Unemployment Rate Rises
Early Tuesday, the ONS revealed that the UK’s ILO Unemployment Rate edged up to 4.4% for the three months to April, compared to 4.3% in the previous period.
Claimant Count Change
The number of people seeking jobless benefits increased by 50.4K in May, significantly higher than the revised increase of 8.4K reported in April, surpassing the expected 10.2K increment.
Wage Inflation Steady
On a positive note, wage inflation, as indicated by Average Earnings Excluding Bonus, remained steady at 6%, matching market expectations. Similarly, Average Earnings, Including Bonuses, increased by 5.9% during the same period, slightly above the forecasted 5.7%.
US Market Influence
The absence of high-impact data releases on the US economic calendar on Tuesday leaves the strength of the USD vulnerable to market sentiment. This situation could prompt investors to hold off on significant positions in anticipation of Wednesday’s US inflation data and the Federal Reserve’s monetary policy announcements, both of which could have a substantial impact on GBP/USD.
Mixed Data Impact on GBP/USD
The mixed nature of the UK employment report caused a slight dip in GBP/USD, which is trading flat at around 1.2725. The Labour Force Survey (LFS) estimates indicate a higher unemployment rate and economic inactivity rate than last year, adding to the cautious outlook.
Conclusion
Despite the mixed UK employment data, the GBP/USD pair has managed to stay above 1.2700. However, this situation calls for caution. Investors are advised to closely monitor the upcoming US economic data and the Federal Reserve’s announcements, as these factors could significantly influence the market direction.
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