In the UK, job vacancies plummeted by 43,000 for the 15th consecutive quarter, hinting at a broad economic slowdown affecting diverse industries. This decline suggests a weakening labor market and reflects the economic deceleration in the July to September period. Despite this worrying trend, wage growth surged unexpectedly to 7.9% annually, marking one of the highest growth rates since records began in 2001. However, this robust wage increase could raise concerns for the Bank of England (BoE), especially as they contemplate potential interest rate adjustments. The impending release of anticipated lower inflation figures offers a possible counterbalance to the apprehension surrounding the remarkable wage growth.
Simultaneously, in the US, the dollar remains stable ahead of the projected decrease in inflation, expected to dip to 3.3% from the current 3.7% year-on-year. This possible decline in inflation might signal to markets a potential pause in the Federal Reserve’s interest rate hike trajectory. Such an outcome could shape global market sentiments, influencing investment strategies and trade decisions.
In essence, the economic fluctuations witnessed in the UK and the US emphasize a nuanced interplay between crucial indicators: plummeting job vacancies and rising wages in the UK, alongside the anticipation of cooling inflation in the US. This intricate economic scenario holds significant implications for central bank decisions, potentially impacting businesses, investors, and individuals across these regions.
GBP/USD outlook – technical analysis
GBP/USD found support on the 20 SMA and has risen over the 50 SMA, bringing 1.2340, the October high into focus as the next target. A rise above here could see buyers aim for 1.2440, the 200 sma.
On the downside, a break below the 50 sma at 1.2255 and the 20 sma at 12210 could see sellers push the price back to 1.21 the November low, ahead of 1.20409 the October low.