GBP/USD edges lower to near 1.2690 on risk aversion

British Pound slips as wage growth slides

The British pound is sharply lower on Tuesday after a solid UK employment report. In the European session, GBP/USD is trading at 1.2641, down 0.68%. The UK employment report indicated that the labour market remains solid while wage growth is falling rapidly. The unemployment rate was unchanged at 4.2% and the economy added 73,000 jobs in the three months to November, following 55,000 in the previous release and above the market estimate of 50,000.

The key segment of the employment release was wage growth. Average earnings including bonuses in the three months to November eased to 6.5%, down from 7.2% a month earlier and 8.5% four months ago. Read more…

GBP/USD edges lower to near 1.2690 on risk aversion, Houthi attacks US ships

GBP/USD moves lower to near 1.2690 during the Asian session on Tuesday. The Pound Sterling (GBP) loses ground against the US Dollar (USD) on risk aversion, which could be attributed to the concerns regarding geopolitical risks, dominating the sentiment of market participants. Furthermore, traders await the labor market data from the United Kingdom to be released on Tuesday.

UK Claimant Count Change came in at 16K in November, while the ILO Unemployment Rate (3M) is forecasted to hold steady at 4.2%. October’s Employment Change printed 50K figures. Additionally, Tuesday’s testimony of the Governor Andrew Bailey of the Bank of England (BoE) has been canceled which was scheduled before the Lords’ Economic Affairs Committee in London. Traders would like to observe if the BoE’s Governor speaks at the World Economic Forum in Davos, Switzerland. Read more…

Pound Sterling plunges amid headwinds of soft UK wage growth, risk-off sentiment

The Pound Sterling (GBP) falls sharply on Tuesday’s European morning session as the United Kingdom Office for National Statistics (ONS) reported a sharp slowdown in the Average Earnings data for three months ending November. The labor market remained steady in this period despite vulnerable economic conditions in the domestic and overseas markets. A softer-than-projected wage growth is expected to convince investors more about early rate cuts from the Bank of England (BoE).

The UK economy is exposed to a technical recession as the ONS reported a contraction in the third quarter of 2023. The BoE is also less confident about any growth in the final quarter of 2023 due to higher interest rates and a deepening cost-of-living crisis. Now, a softer inflation outlook, along with fears of further economic pain, could allow BoE policymakers to roll back their tight interest rate stance. Read more…