GBP/USD Exchange Rate Stable as UK Employment Data Beats Expectations
The Pound US Dollar (GBP/USD) exchange rate is rangebound this morning as markets react to the UK’s latest jobs report.
At the time of writing the GBP/USD exchange rate is trading at around $1.2327 this morning, virtually unchanged from its opening rate and leaving the pairing trading close to a five-week high.
Surging Wage Growth Unpins the Pound (GBP)
The publication of the UK’s latest employment figures is helping the Pound (GBP) consolidate its recent gains this morning, despite some lingering doubts on Brexit.
According to data published by the Office for National Statistics (ONS), domestic unemployment fell back to 3.8% in July, a joint 44-year low.
On top of this wage growth (including bonuses) was shown to have shot up to 4%, the fastest acceleration since 2008.
This has helped to offset some political jitters in the UK this morning after the proroguing of parliament yesterday reignited some concerns that Boris Johnson could seek to subvert a bill compelling him to seek a delay to Brexit.
Analysts at TD Securities suggest:
‘Parliament has been suspended until October 14, with Johnson stating that he will not delay Brexit any further, reiterating that he is prepared to leave the EU without an agreement if necessary.
‘This would effectively ignore legislation passed into law earlier blocking a no-deal Brexit forcing the PM to seek a delay until 31 Jan 2020.’
GBP investors also await the release of documents pertaining to the government’s no-deal Brexit plans, after a motion was passed in parliament on Monday compelling their release.
US Dollar (USD) Sell-Off Begins to Fade
After driving heavily losses over the last week, the selling bias surrounding the US Dollar (USD) appears to have begun to ease this morning.
This stabilising of the ‘Greenback’ comes as safe-haven demand shows signs of recovery in the wake of some abysmal PPI figures from China.
Commenting on the PPI data Neil Wilson, chief market analyst at Markets.com, said:
‘China’s produce price index declined 0.8% in August amid falling demand for finished goods.
‘The fear is not just that it signals weakness in domestic and overseas demand, but that China is exporting deflation by cutting prices and making it even harder for central banks like the ECB to achieve their inflation goals. Could be a tough session in Europe.’
However any upside in the US Dollar may ultimately prove limited as investors brace for the Federal Reserve’s upcoming rate decision next week.