- GBP / USD struggles to gain any significant traction amid modest USD strength.
- The upbeat UK employment details did not impress the bulls or provide fresh momentum.
- Diminishing expectations of a BoE rate hike act as a headwind amid Brexit-related uncertainties.
The pair GBP / USD remains stable just above the round level of 1.3200 after the publication of the UK monthly employment details.
The UK Office for National Statistics reported that the number of people claiming unemployment benefits decreased by 49,800 in November, compared to the drop of 14,900 the previous month. What’s more, the unemployment rate dropped from 4.3% to 4.2% during the three months until October. Other details revealed that wage pressures eased slightly towards the end of the year.
The data, however, did little to provide any significant boost to the British pound. amid declining odds of an imminent interest rate hike by the Bank of England at their next meeting on Thursday. This, along with lingering uncertainties about Brexit, continued to act as a headwind for the British pound and limited the rise for the GBP / USD pair amid a modest strength of the US dollar.
The USD held firm near a one-week high and remained supported by prospects for an early tightening of monetary policies by the Fed. In fact, money markets indicate the possibility of an eventual rate hike for June 2022 and another hike as early as November. Aside from this, the economic risks arising from the spread of the Omicron variant further underpinned the safe-haven US dollar.
Meanwhile, the inability of the GBP / USD pair to gain any significant traction suggests that the recent downtrend seen since October may still be far from over. Having said that, investors could refrain from opening aggressive positions ahead of central bank events. The Fed will announce its policy decision on Wednesday and the BoE meeting is scheduled for Thursday.
Therefore, it will be prudent to wait for acceptance below the 1.3200 level before positioning for any further bearish movement. Market participants are now awaiting the release of the US IPP producer price index for some boost at the start of the American session. Investors will also take cues from the broader market risk sentiment to seize some opportunities around GBP / USD.
GBP / USD technical levels