British pound edges lower as employment market cools

• UK labour market cools
• UK Manufacturing and Service PMIs decline

The British pound is slightly lower on Tuesday, after climbing 0.68% a day earlier. In the European session, GBP/USD is trading at 1.2218, down 0.23%.

UK job growth, unemployment rises

The UK has released “experimental” employment data on Tuesday, replacing the standard labour market survey due to falling response rates. The new reporting format didn’t change the fact that the UK labour market continues to lose steam. The unemployment rate held steady at 4.2%, unemployment rose by 74,000 and the number of employed people fell by 82,000. Last week’s wage growth report showed that wages including bonuses fell from 8.5% to 8.1% y/y for the three months to August, which is still very high and a significant driver of inflation.

Employment data is a key factor for the Bank of England, which will have to decide whether to raise rates or pause at the meeting on November 2nd. The BoE paused in September for the first time since the tightening cycle began in December 2021. Governor Bailey said at that meeting that positive inflation data had allowed the BoE to hold rates. There are no more tier-1 releases ahead of the November meeting, which means that investors will be listening carefully to any comments from Bailey & Co. ahead of the meeting.

The UK also released PMI reports today, which provided further evidence of a weak economy. The Manufacturing PMI improved slightly to 45.2 in October, up from 44.3 in September and above the market consensus of 44.7. Manufacturing has contracted for eight straight months, the longest downturn in 15 years. Services eased from 49.3 to 49.2 in October, missing the market consensus of 49.3. It marked the lowest level in nine months.  The neutral 50 level separates contraction from expansion.

.

GBP/USD Technical

• GBP/USD is testing support at 1.2216. Below, there is support at 1.2174
• There is resistance at 1.2290 and 1.2332

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.