“¢ Stronger UK wage growth/unexpected dip in unemployment rate provided a minor lift to the GBP.
“¢ Risk-off mood amid global growth concerns underpin USD’s safe-haven status and cap gains.
The GBP/USD pair struggled to build on its intraday positive momentum and quickly retreated around 30-pips from the 1.2925-30 supply zone.
The British Pound remained supported by decreasing likelihood of a no-deal Brexit or a second referendum and helped the pair to reverse an initial dip to 1.2855 level. The uptick was further supported by better than expected UK wage growth data and an unexpected dip in the unemployment rate.
Data released by the Office for National Statistics said on Tuesday showed average weekly earnings, including bonuses, hit a new 10-year high and rose by 3.4% 3m/y in the three months to the end of November. Adding to this, the unemployment rate fell to 4.0% in November, beating expectations for it to hold steady at 4.1%.
Solid UK jobs report strengthened the case a gradual policy tightening by the Bank of England and provided a minor lift to the British Pound, though the prevalent risk-off mood underpinned the US Dollar’s relative safe-haven status and collaborated towards keeping a lid on any runway rally, at least for the time being.
Next on tap will be the second-tier release of US existing home sales data but is unlikely to provide any meaningful impetus amid plenty of Brexit uncertainties, especially after the UK PM Theresa May’s Brexit Plan B lacked any significant details to prevent customs checks on the Irish border.
Technical levels to watch
Mario Blascak, FXStreet’s own European Chief Analyst writes: “While 1.2800 is a short-term target on the downside for GBP/USD, the pair needs to break back below the trendline at 1.2750 to extend the downside towards 1.2610. On the upside, the 1.2900 and 1.2990 remain the immediate targets.”
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