Jobs Data Sees GBP/USD Conversion Head to 1.52
The British pound was bid higher after it was confirmed that the UK economy continues to head towards full employment and wages are steadily increasing.
The British pound rallied against the dollar, euro and other majors with currency traders focusing on news the UK unemployment rate continues to decline at a robust pace.
We have seen GBPUSD make gains for four consecutive days now as the UK currency looks to form a base against the Greenback after the sharp falls seen in the preceding week.
Average earnings, with bonuses included, grew at 3% in October, unchanged from the previous month. But, markets were wanting to see growth and had expected a figure of 3.2%.
The claimant count - those looking for work and drawing benefits - rose by 3.3K, a smaller increase of 1.4K was expected. Interestingly though the UK's unemployment rate edged lower to 5.3% and it is this that stimulated sterling bulls into action.
"On balance, it seems likely that the marginal news for policymakers is that momentum in employment creation is stronger than expected, rather than pay growth stalling," says Richard Hillary at RBC Capital Markets.
The pound to dollar exchange rate is looking to confirm this as its fourth successive day of climbs having broken the 1.52 markm resistance does however now loom large at 1.5250.
A break above this level is required to confirm further gains. GBPUSD managed to achieve this in early October; momentum from the break took sterling to 1.56 confirming this exchange rate remains trapped in the longer-term sideways trend that has absutely dominated trade in 2015.
Indeed, price action suggests the range-trade will maintain its grip on this exchange rate tinto 2016 and defy those forecasters who priced in a break below 1.50.
Latest Pound / US Dollar Exchange Rates
  | Live: 1.3344▲ + 0.13%12 Month Best:1.3789 |
*Your Bank's Retail Rate
| 1.289 - 1.2943 |
**Independent Specialist | 1.3157 - 1.321 Find out why this is a better rate |
* Bank rates according to latest IMTI data.
** RationalFX dealing desk quotation.
Sterling's Inflation Report Hangover
The pound suffered last week following the Bank of England’s (BoE) quarterly inflation report; it revealed a cut to the inflation forecast with inflation expected to remain below 1%, at least until the second half of 2016.
With no likelihood of an increase rate, sterling found itself under pressure against its currency rivals.
However, the BoE’s quarterly report came after positive data and great gains for the pound. The Purchase’s managers’ indices for the major UK industries reported noteworthy growth in October.
Then at the very end of last week, there was the release of the manufacturing production figures from the UK. It echoed the better-than-expected PMI figures and allowed the sterling to recover lost gains against the EUR. But it was not enough for the sterling to gain ground on the USD; that currency rode the high wave of a great US October job report that exceed forecasted figures.
