The British pound today rallied higher briefly against the US dollar after the release of positive UK labour market report, but later declined retracing most of its gains. The weak US housing data barely had an impact on the GBP/USD currency pair, which was weighed down by the Bank of England‘s dovish stand.
The GBP/USD currency pair declined by over 60 points from the height of its brief rally after the positive jobs report.
The British pound had initially rallied higher as investors reacted to the positive jobs reports released by the Office for National Statistics. The average weekly earnings had reported 2.1% growth rates as opposed to the 1.8% expected increase. The ILO unemployment rate was also recorded at 4.4% as compared to the market consensus of 4.5%. The UK labour market report also exceeded market expectations by coming in at 125,000 new jobs versus the expected 97,000 jobs.
The GBP/USD currency pair’s decline was largely occasioned by the dynamics leading to a stronger US dollar. Investors bought the US dollar as they were uncertain whether the BoE would revise its dovish stance despite the strong employment data. The disappointing US housing starts and building permits data could not reverse the currency pair’s downward spiral.
The currency pair’s short-term performance is likely to be affected by the release of the UK retail sales data and the US jobless claims data, both scheduled for tomorrow.
The GBP/USD currency pair was trading at 1.2864 as at 1725 GMT having declined from a high of 1.2903 earlier today. The GBp/JPY was trading at 142.15 having dropped from a high of 143.09.
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