Pound Loses Ground Against Dollar After British Jobs Data

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Pound Loses Ground Against Dollar After British Jobs Data

Pound loses ground against dollar After British Jobs Data

The GBP lost ground against the US Dollar after the recent jobless data from the United Kingdom. The data revealed that the number of jobless people increased, which means that the Bank of England will be less likely to introduce big rate hikes.

Although the chances of fewer rate hikes are good for the stock market, we can't say the same about the GBP! As a result of the recent jobs data, the GBP lost ground while the US Dollar gained the upper hand.

Sterling Down By 0.5%

Overall, the Sterling lost 0.5% of its value against the US Dollar & was last seen near $1.2467. Similarly, it lost ground against the EUR/GBP and was last seen near 87.17.

If we look at the date, the unemployment rate in the United Kingdom has reached 3.9% which is an indication that more people are back in the jobs market.

Based on the recent economic data, it appears that there is at least 1 additional rate hike on the cards. The Bank of England will likely introduce a 25 bps rate hike in its next meeting.

According to one strategist at Rabobank, there are also broader factors that are affecting the GBP. In fact, most of the good news related to the GBP is already priced in!

And if we look at the upcoming economic situation in the United Kingdom, there's not enough good news that supports the GBP.

On the other hand, the weakness of the GBP and the strength of the USD also led support to for the Dollar index. After the economic release, the USD index jumped to 102.57 which is just few points away from 102.75 (5-week's top).

But given the political and economic turmoil in the USA related to the debt ceiling issue, there's a lot that could dictate the GBP/USD's next direction. However, the near-term outlook for the GBP/USD is skewed towards the downside.

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