The British pound today briefly rallied higher against the US dollar after the release of the UK employment data by the Office for National Statistics, which beat expectations. However, the rally was short-lived as the GBP/USD currency pair retraced all its gains within the same hour as markets reviewed the labor report.
The GBP/USD rallied to hit a high of 1.3213 after the release of the UK labor report, but immediately declined by over 75 points to trade at new lows.
The release of the UK labour market report for November covering the period from July to September was responsible for both the brief rally and the massive reversal in the currency pair. The employment rate was recorded at 75.0%, which is lower than that for the second quarter, but higher than for a similar period last year. The unemployment rate was recorded at 4.3%, which was lower than last year’s 4.8% and the joint lowest since 1975. These stellar employment figures triggered the rally.
The immediate decline in the currency pair was triggered by the weak earnings growth as real wages declined by 0.5% as compared to a similar period last year. The weak earnings growth put a damper on market expectations that the Bank of England would raise interest rates in the near future.
The currency pair’s short-term performance is likely to be affected by macro releases from the US docket including the CPI and the advance retail sales data, both scheduled for later today.
The GBP/USD currency pair was trading at 1.3166 as at 12:54 GMT having recovered from a low of 1.3130 hit earlier today. The GBP/JPY currency pair was trading at 148.47 having dropped from a high of 149.30 hit during the Asian session.
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