GBP/USD:FUNDAMENTAL NEWS+TECHNICAL ANALYSIS | SHORT SETUP 🔔
The Pound US Dollar (GBP/USD) exchange rate has wavered higher today, despite some troubling UK employment data, as risk appetite recovers.
Looking ahead, risk appetite could continue to drive GBP/USD through today’s session, while tomorrow brings the latest US retail sales data.
Pound (GBP) Exchange Rates Recover as Market Mood Improves
The Pound (GBP) initially dipped this morning as market sentiment soured and the UK’s latest jobs data caused concern among GBP investors.
The UK’s latest labour market overview from the Office for National Statistics (ONS) showed a larger-than-expected drop in the UK’s unemployment rate. The rate dropped from 4.1% to 3.9% – beating expectations of 4% – putting it back to pre-pandemic levels. However, total employment remains well below its pre-Covid peak.
In addition, wage growth fell further behind inflation as the UK’s income squeeze deepens. Real wages, which are adjusted for inflation, suffered the biggest fall in over seven years.
This worrying data weighed on Sterling, knocking it lower against the US Dollar (USD).
However, risk appetite began to improve among European investors, thereby boosting the risk-sensitive Pound. Diplomats from Russia and Ukraine will continue peace talks today, following negotiations yesterday.
Although previous discussions have ended without agreement, Ukrainian President Volodymr Zelenskiy said that yesterday’s meeting went ‘pretty good’.
Markets are therefore growing more hopeful that the war in Ukraine can be solved through diplomatic means. With the ongoing invasion posing significant risks to the UK economy, any positive news is likely to boost Sterling.
US Dollar (USD) Exchange Rates Slip amid Risk-On Trade
Meanwhile, the US Dollar is softening as the improving market mood dampens the appeal of the safe-haven currency.
In addition, a lower-than-forecast US PPI failed to provide the ‘Greenback’ with much support.
USD’s downside is limited, however, as growing Covid cases in China keep a cap on risk appetite.
In response to a recent coronavirus outbreak, China has been imposing increasingly widespread restrictions in an attempt to curb the spread of the virus.
Yesterday, China quarantined the entire province of Jilin – home to 24 million people. This is the first time China has locked down a whole province since the Hubei province, which contains Wuhan, was locked down at the beginning of the pandemic.
Markets are concerned that the restrictions could dent growth in the world’s second-largest economy while also disrupting global supply chains.
This is keeping a lid on market optimism today, thereby limiting USD’s losses.
Looking ahead, risk appetite could continue to drive GBP/USD through today’s session, while tomorrow brings the latest US retail sales data.
Pound (GBP) Exchange Rates Recover as Market Mood Improves
The Pound (GBP) initially dipped this morning as market sentiment soured and the UK’s latest jobs data caused concern among GBP investors.
The UK’s latest labour market overview from the Office for National Statistics (ONS) showed a larger-than-expected drop in the UK’s unemployment rate. The rate dropped from 4.1% to 3.9% – beating expectations of 4% – putting it back to pre-pandemic levels. However, total employment remains well below its pre-Covid peak.
In addition, wage growth fell further behind inflation as the UK’s income squeeze deepens. Real wages, which are adjusted for inflation, suffered the biggest fall in over seven years.
This worrying data weighed on Sterling, knocking it lower against the US Dollar (USD).
However, risk appetite began to improve among European investors, thereby boosting the risk-sensitive Pound. Diplomats from Russia and Ukraine will continue peace talks today, following negotiations yesterday.
Although previous discussions have ended without agreement, Ukrainian President Volodymr Zelenskiy said that yesterday’s meeting went ‘pretty good’.
Markets are therefore growing more hopeful that the war in Ukraine can be solved through diplomatic means. With the ongoing invasion posing significant risks to the UK economy, any positive news is likely to boost Sterling.
US Dollar (USD) Exchange Rates Slip amid Risk-On Trade
Meanwhile, the US Dollar is softening as the improving market mood dampens the appeal of the safe-haven currency.
In addition, a lower-than-forecast US PPI failed to provide the ‘Greenback’ with much support.
USD’s downside is limited, however, as growing Covid cases in China keep a cap on risk appetite.
In response to a recent coronavirus outbreak, China has been imposing increasingly widespread restrictions in an attempt to curb the spread of the virus.
Yesterday, China quarantined the entire province of Jilin – home to 24 million people. This is the first time China has locked down a whole province since the Hubei province, which contains Wuhan, was locked down at the beginning of the pandemic.
Markets are concerned that the restrictions could dent growth in the world’s second-largest economy while also disrupting global supply chains.
This is keeping a lid on market optimism today, thereby limiting USD’s losses.
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