Pound Sterling Poised for Further Gains as Strong Employment Data Exceeds Forecasts

Pound Sterling advances as the market mood turns cheerful.


The UK ONS reported that the labor force shed jobs for the third time in a row.

The BoE is expected to leave interest rates unchanged next week.

The British Pound (GBP) is getting stronger, heading towards the important 1.2300 resistance level. This is because people feel more positive about the market, and the job data turned out better than expected. According to the UK Office for National Statistics (ONS), even though the job market lost jobs for the third time in a row in the quarter ending in August, the number of jobs lost was not as much as we thought. Also, the Unemployment Rate went down and stayed below what we expected, which means that the job market is looking stable.

The demand for workers in the UK has slowed down a lot because of the tough economic situation and the higher interest rates set by the Bank of England (BoE). The BoE has been increasing interest rates to try to lower consumer inflation to 2%. People are now waiting to see what the BoE will decide about interest rates on November 2. Most people think the BoE will keep interest rates at 5.25% because the economy doesn’t look very strong right now.

Today’s Market Update: Pound Sterling Rises Thanks to Strong Job Numbers

  1. The Pound Sterling is going up because people are feeling better about the economy, and job data in the UK is better than expected.
  2. In the June-August period, UK employers cut 82,000 jobs, which was less than the expected 198,000 job cuts. In the three months to July, 207,000 jobs were lost.
  3. This is the third consecutive month where the job market has been shrinking, meaning companies are cutting jobs due to low demand.
  4. The Unemployment Rate dropped to 4.2% in the three months to August, lower than expected and the previous rate of 4.3%.
  5. In September, the number of people claiming jobless benefits increased by 20,400, while it was expected to rise by only 2,300. In August, there were 900 people claiming jobless benefits.
  6. The labor market data was supposed to be released last week, but there were inconsistencies in the responses compared to tax data and employer surveys.
  7. Note that the Employment Change and Unemployment data are experimental estimates because the usual data collection had low response rates.
  8. A Reuters poll predicts that the Bank of England will keep interest rates at 5.25% on November 2.
  9. The lack of positive economic indicators, along with the belief of the BoE Governor that inflation will decrease next month, might lead to unchanged interest rates.
  10. The UK’s Manufacturing and Services PMI, along with slow labor demand and reduced Retail Sales, indicate a weak economy and lower consumer inflation expectations.
  11. Global market sentiment is gloomy due to tensions in the Middle East, with potential military actions in Gaza and casualties reported.
  12. The GBP/USD pair strengthened as the US Dollar Index (DXY) fell, mainly because of lower long-term US Bond yields.
  13. 10-year US Treasury yields have decreased in anticipation of key US economic data to be released later in the week, including Q3 Gross Domestic Product (GDP), the Federal Reserve’s preferred inflation measure, and Durable Goods Orders data.
  14. Investors are concerned about worsening financial conditions, higher yields, and Middle East tensions, which could slow down the US economy.