Pound Sterling GBP Forecast to Fall Despite Go-Ahead UK Jobs Data

December 16, 2015 - Written by Ben Hughes

STORY LINK Pound Sterling GBP Forecast to Fall Despite Go-Ahead UK Jobs Data

Unexpected Drop in UK Unemployment Failed to Support the Pound Sterling Today

Positive UK economic data, published earlier today, has so far failed to support the Pound Sterling (currency : GBP) against the other sixteen most actively traded global currencies.

The Office of National Statistics (ONS) figures showed that the rate of British joblessness had plunged to its lowest level for the best part of a decade at 5.2% during the three months leading up to the end of October.

The consensus expectation amongst analysts was that the key number would show at 5.3%, so the news should by rights have bolstered support for the Pound, however the Sterling euro exchange rate was trading down by the best part of 0.25% on the day, touching 1.3702 a short time ago.

Slower-than-Expected UK Wage Growth Weighed on Sterling Demand Today

The ONS data also revealed that real wages in the UK climbed by an apparently healthy 2.4% during the same period.

This was significantly down from last month’s counterpart showing of 3.0%, which in itself was a key level; Bank of England (BoE) Governor Mark Carney has previously suggested that he would want real wages to be increasing by at least 3.0% before he would feel comfortable with a UK interest rate hike. It was this concern which held back the Pound on the day.

GBP/USD Exchange Rate Edged Below 1.5000 ahead of Federal Reserve Interest Rate Decision

Meanwhile, the Pound US Dollar exchange rate briefly edged down below the 1.5000 GBP USD threshold earlier, as investors eyed tonight’s US Federal Reserve monetary policy announcement.

Futures markets are still pricing-in an over 80% chance that America’s central bank will begin a fresh rate increasing cycle tonight and the move in favour of the Buck on the day would appear to be driven by investors factoring in this high likelihood.

Accendo Markets summed up the situation earlier by stating that, ‘the overriding expectation is for a 25 basis point hike (which is more or less priced in already) while the real market-moving aspect will undoubtedly be the Fed's language for its indications as to the future pace of tightening.’

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TAGS: American Dollar Forecasts Pound Dollar Forecasts Pound Sterling Forecasts