The pound declines after the rebound despite the labour market

Expert market comment made by Chief Market Analyst Alex Kuptsikevich of the FxPro Analyst Team: The pound declines after the rebound despite the labour market

The pound declines after the rebound despite the labour market

The UK labour market figures released on Tuesday did not prevent the pound from pulling back after Monday's increase. GBPUSD is falling by approximately 0.9% from early morning highs, reversing two-thirds of the gains following reports that Trump will not immediately implement trade barriers but will begin with a job evaluation process.

Jobless claims rose by 0.7K in December, against expectations of 10.3K. After two months of decreases totalling 36K, the trend of increasing unemployment from April to September appears to have halted.

The rate of wage growth accelerated from 5.2% to 5.6% last year, showing a positive trend from August's 3.9%. The acceleration in wage growth could indicate potential inflationary pressures that might lead the Central Bank to adopt a less dovish stance than previously anticipated.

The coinciding timing of the local bottom in the labour market with the cycle of rate cuts starting in August is likely coincidental. Policy changes typically take several months to quarters to impact the economy.

Moreover, the unemployment rate has risen to 4.4%, and the number of unemployed has been increasing for the past eight months. Alongside rising wages, this may reflect a trend of cutting lower-paid jobs, which raises the average wage growth rate but negatively impacts overall spending. The recent news of a 0.6% month-on-month decline in retail sales excluding fuel could be an early warning sign of this trend.

GBPUSD soared up to 1.2340 on Monday but fell by 90 pips to 1.2250 on Tuesday, with strong support from last April acting as resistance. This may indicate the end of the bounce as the pound lost momentum near the 61.8% retracement level of the decline from the December peak to the January low. Confirmation of strong bearish sentiment would be a return to the lows at 1.21. Falling below this level could trigger a Fibonacci extension pattern, potentially leading to a decline to 1.1660. Historically, the Pound has only been below this level for one week in March 2020 and ten weeks in the latter part of 2022.

Trump's firm commitment to reducing the US trade deficit is benefiting bears in GBPUSD, as seen in the trends observed in 2018-2019 during periods of trade disputes.

By the FxPro Analyst Team

FxPro
Tipo: NDD
Reglamento: FCA (UK), SCB (The Bahamas)
read more
GBP Holds Near Highs as Market Awaits BoE Decision

GBP Holds Near Highs as Market Awaits BoE Decision

The GBP/USD pair stabilised around 1.3626 USD on Thursday, following a highly volatile session on Wednesday. The pair remains close to its highest level in over ten weeks, as markets await the Bank of England’s policy decision later today.
RoboForex | hace 8h 34min
ATFX ​Market Outlook 18th September 2025

ATFX ​Market Outlook 18th September 2025

The Bank of England announced its policy decision later today. Markets widely expect no change in rates, but attention will be paid to policymakers’ assessment of recent data. Traders will be looking for signals on a potential rate cut in November, as U.K. inflation has rebounded toward 4%, while July GDP growth stalled and labor market conditions remain weak.
ATFX | hace 12h 54min
Currencies Steady Ahead of Fed; UK CPI Holds, Oil Pressured | 17th September 2025

Currencies Steady Ahead of Fed; UK CPI Holds, Oil Pressured | 17th September 2025

Markets traded cautiously Wednesday as traders awaited the Fed’s rate decision. EUR/USD slipped near 1.1850, NZD/USD retreated below 0.6000, and AUD/USD stayed subdued. WTI crude came under renewed pressure, while UK CPI eased slightly to 3.8%, keeping BoE policy in focus. Volatility is expected to rise as Fed, ECB, and BoE updates drive direction across FX and commodities.
Moneta Markets | hace 1
ATFX Market Outlook 17th September 2025

ATFX Market Outlook 17th September 2025

U.S. retail sales for August posted robust growth, but tariffs and labor market weakness continue to pose downside risks. All three major U.S. stock indices closed lower in choppy trading as investors remained cautious ahead of the Federal Reserve’s widely anticipated rate cut. The Dow Jones fell 0.27%, the S&P 500 slipped 0.13%, and the Nasdaq eased 0.07%.
ATFX | hace 1