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British Pound (GBP/USD) Grinding Higher After a Strong UK Jobs Report


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GBP/USD Price, Chart, and Analysis

  • UK unemployment rate falls to 3.9%, a record number of job vacancies.
  • The Bank of England MPC decision on Thursday is key.
British Pound (GBP/USD) Grinding Higher After a Strong UK Jobs Report

The latest Office for National Statistics (ONS) jobs report shows that UK unemployment is back at pre-pandemic levels, while job vacancies have recorded yet another record high. The January unemployment rate fell to 3.9%, from a prior month’s 4.1%, while the number of job vacancies grew by 105,000 from the last quarter to hit a record 1,318,000. Growth in average total pay (including bonuses) was 4.8% and growth in regular pay (excluding bonuses) was 3.8% among employees from November 2021 to January 2022.

British Pound (GBP/USD) Grinding Higher After a Strong UK Jobs Report

Today’s robust jobs report follows last week’s strong monthly GDP release where monthly, quarterly and annual growth all beat expectations, while industrial and manufacturing production numbers also beat market forecasts. Sterling however is refusing to take these figures at face value with GBP/USD slipping back to 1.3000, before rebounding back to 1.3070, while EUR/GBP today posted a fresh five-week high at 0.8455. The Bank of England MPC meet on Thursday and will announce their latest policy decision with another 25 basis point interest rate hike fully priced into the market. A hawkish twist by governor Andrew Bailey, or an unexpected 50bps hike, may help stabilise Sterling at its current lowly levels and give the currency room to move higher.

For all market-moving economic data and events, refer to the DailyFX calendar

GBP/USD has tested 1.3000 twice in the last two days but the round number has held, so far. The break of the mid-November/mid-December cluster of lows between 1.3150 and 1.3200 has cast a bearish shadow over the pair and now acts as a zone of resistance. If 1.3000 breaks there is a possibility that GBP/USD may re-test the September 2020 swing-low at 1.2675.

GBP/USD DAILY PRICE CHART – MARCH 15, 2022

British Pound (GBP/USD) Grinding Higher After a Strong UK Jobs Report

Retail trader data show 73.99% of traders are net-long with the ratio of traders long to short at 2.84 to 1. The number of traders net-long is 0.54% higher than yesterday and 15.39% higher from last week, while the number of traders net-short is 8.50% higher than yesterday and 1.06% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests GBP/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed GBP/USD trading bias.

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What is your view on GBP/USD – bullish or bearish?

 

Mar 15, 2022 |  Nick Cawley, Strategist. DailyFX

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