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Pound loses ground following mixed labour market data

GBP - British Pound

Those looking for a stronger GBP were left disappointed this morning following the release of mixed labour market statistics for June.

UK wage pressures continue to rise and beat analyst expectations, however the rate of unemployment ticked slightly higher, according to the Office for National Statistics (ONS). The UK’s official jobless rate rose to 4.8% in June vs the previous 4.7%. But the Claimant Count Change showed a drop last month.

The market was looking for 90K jobs to be created in the three months to June, meaning the actual figure of 25K disappointed against market expectations. Worse than expected figures tend to add pressure on the pound, which we have seen this morning.

Key Movers

The US dollar weakened against most of the major currencies as Treasury yields took a tumble. Federal Reserve Chairman Powell admitted that inflation data has been higher than expected, and they lack certainty on transitory inflation even though they believe that to be the case. This sentiment from Powell is important as it reinforces the possibility of the Fed tapering asset purchases this year, which could strengthen the USD.

Powell also sees the next six months as critical for US inflation, to see if it falls back as they expect. Should the inflation rate remain high, this could mount more pressure on the Fed to bring forward rate hikes which can be positive for the USD.

Expected Ranges

GBP/USD: 1.3815 - 1.3855 ▲

GBP/EUR: 1.1675 - 1.1705 ▲

EUR/USD: 1.1825 - 1.1845 ▲