Today, on Tuesday, the Pound Sterling crossed an important threshold. Six in a row It proved the skeptics wrong again, extending its winning streak to a sixth straight trading day! At the time of writing, it jumped above 1.3200 against the US Dollar (USD), signaling a robust performance amid favorable labor market data from the United Kingdom (UK). The GBP/USD currency pair skyrocketed, continuing to ride the bullish wave. Indeed, it even touched a new 6-month high above 1.3235 during European trading hours.
The Pound’s value increased considerably following the release of latest UK employment data for the three months to February. This data was much better than expected and increased investors’ confidence. The Pound had a great week against the other major currencies. For a time, it resisted pressure from quality antipodean currencies such as the Australian and New Zealand dollars. The market has been thirsting for fresh economic data. This sentiment places the short-term progression of the GBP/USD currency pair at the core of investors’ trading strategies.
Positive Employment Data Fuels Pound’s Rise
After all, recent labour market statistics indicate that the UK unemployment rate remains a very low 4%. This unusual stability continued through the February quarter. The Pound has been a world currency because of that stability. This is bolstered by a rise in their average earnings, with and without bonuses counted in. The unexpectedly positive data has prompted most analysts to reconsider their pessimistic outlook regarding the UK’s economic recovery.
As analysts licked their wounds at having missed a catastrophic jobs number, this was where the ILO unemployment rate was supposed to be too — flat at 4.4%. These positive indicators are a testament to the strength and resilience of the UK economy. They work to reinforce the strength of the Pound in international markets.
The Index of UK Consumer Prices (CPI) for March is due to be released shortly. Given the potential for political strife, this release is sure to create volatility in the Pound. Investors are still especially tuned into core CPI numbers. These figures cut out the often-volatile food and energy prices and are projected to remain flat with an annual growth rate of 3.5%. This sustained hawkish approach to inflation data will be key in determining the course of future monetary policy decisions by the Bank of England.
Pressure on US Dollar Supports GBP/USD Pair
The USD has been under increasing pressure, mainly from speculation about forthcoming trade wars starting with the Trump administration. A move towards protectionism, or even just mixed signals on the direction of trade agreements, investors are losing faith in the USD’s structural appeal.
The GBP/USD currency pair was solidly above the 1.3200 level as forex traders continued to process these historic developments. Recent trade turmoil and a reoriented policy direction have created a different environment. Today, the Pound has a wonderful opportunity to regroup and capitalize on those gains. The analysts are expecting the level of 61.8% fibonacci retracement 1.2927 will be a major support level of the pair in coming time. Concurrently, they point out the three-year high of 1.3430 as an important resistance level.
President Trump’s hints about possible changes to various trade agreements have been sending markets soaring or plunging. He noted, “I’m looking at something to help car companies with it,” indicating ongoing discussions that may influence currency valuations.
Market Outlook and Future Influences
Moving forward, traders are set to see further data releases continue to shape the Pound’s ongoing performance. Important metrics such as average earnings and the statewide unemployment rate will be available in the coming days. These figures are sure to set the tone of market sentiment during the next days.
The market will closely monitor how these economic indicators interplay with global economic trends and investor sentiment towards risk assets. Street analysts expect the next UK CPI figures to be “explosive.” Even they admit that any serious surprises from expectations might change the Pound’s course very significantly against other currencies.
Taken together, the Pound Sterling’s resurgence is a testament to larger economic trends and localized data manipulation. The broader market sentiment seems cautiously bullish, although volatility is always present in currency trading trends.