GBP/USD falls closer to 1.3000 psychological level on USD strength
- GBP/USD edges close to the 1.3000 line in the sand on USD strength.
- The US Dollar strengthens as markets continue dialing back bets of aggressive interest-rate cuts by the Fed.
- The Pound Sterling, however, finds a foothold from strong UK employment data.
GBP/USD edges lower into the 1.3040s on Tuesday as a result of continued US Dollar (USD) strength, which comes from reduced bets the US Federal Reserve (Fed) will need to be as aggressive at slashing interest rates as previously thought.
The US economy is holding up better than expected and from once fearing a hard landing, or recession, passengers on the US enterprise are entertaining the possibility of “no-landing”. This suggests policymakers will not need to reduce interest rates as sharply as anticipated to stimulate the economy. The expectation that interest rates will remain elevated swells foreign capital inflows, which, in turn, increases demand for USD.
GBP/USD fails to rise on positive UK jobs data
GBP/USD is sliding lower despite just-released UK jobs data coming out relatively positive – something which would normally have been expected to strengthen the Pound Sterling (GBP) and elevate the Cable.
The Unemployment Rate fell to 4.0% in the three months to August from 4.1% in the previous three months, and beat expectations of the same (4.1%). The Employment Change showed a 373K rise over the same period from 265K previously, and average earnings rose in line with expectations. The only data point to cause concern was the September Claimant Count, which rose to 27.9K from 23.7K in August, and beat expectations of 20.2K.
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