The British pound today rallied higher and recovered from a 3-day losing streak as investors hoped for a breakthrough in Brexit negotiations. However, the lack of any tangible progress in the Brexit proceedings and the mixed UK jobs report released today stalled the cable’s rally.
The GBP/USD currency pair today rallied from an opening low of 1.2850 to a high of 1.2917 before retracing some of its gains.
The cable’s rally was initially attributed to the positive comments made by British PM Theresa May yesterday when she claimed that Brexit negotiations were at an endgame. However, her optimism did not materialize into results as the Brexit negotiations did not result in any type of deal. Therefore, the pair’s rally is seen as a relief rally or a pullback before resuming it’s long-term downtrend. The release of the mixed UK labour market report by the Office for National Statistics triggered the pair’s decline as the number of jobless claims in the UK jumped significantly.
According to the jobs report, average weekly earnings excluding bonuses grew by 3.2% beating consensus estimates set at 3.1%, but did not lift the pair higher. The higher ILO unemployment rate, which came in at 4.1% instead of 4.0% and the higher number of jobless claims, which were recorded at 20,200 versus the expected 4,300 increase, also contributed to the pair’s decline.
The cable’s future performance is likely to be affected by Brexit headlines given the almost empty US docket.
The GBP/USD currency pair was trading at 1.2899 as at 10:48 GMT having rallied from a low of 1.2850. The GBP/JPY currency pair was trading at 147.15 having risen from a low of 145.97.
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