The pound surged against the greenback yesterday following the release of US inflation data that indicated a slower-than-anticipated rise in consumer prices in October. The UK’s Claimant Count Change data for October missed estimates. However, the US inflation data encouraged market participants to bet on an end to the Fed’s rate hike cycle, implying a US dollar sell-off. Overall, the GBP/USD pair surged from a low of 1.2270 to a high of 1.2430 in the past 24 hours.
According to the Office for National Statistics, the UK’s Claimant Count Change, which represents the change in the number of people claiming jobless-related benefits, rose by 17,800 in October, following an increase of 9,000 in the previous month and higher than forecasts of 15,000.
The count of vacancies in the UK declined by 58,0004 (quarter-on-quarter) in the August–October 2023 period, reaching 957,000.
The number of employees on the payroll rose by 33,000 in October to 30.20 million.
Furthermore, the UK employment rate fell by 0.10% q-o-q in the September 2023 quarter to 75.70%. Likewise, the country’s economic inactivity rate remained largely unaltered (q-o-q basis) at 20.90%.
At the end of September, the UK’s unemployment rate stood at 4.20%, unchanged from the previous month and in line with estimates.
According to the US Bureau of Labor Statistics, the country’s consumer price index stood unchanged in October, following an increase of 0.40% in September and a notch lower than forecasts of 0.10% growth.
The energy index declined 2.50% m-o-m in October against the backdrop of a 5% fall in the gasoline index. The food index inched up 0.30% in October, following a rise of 0.20% in September. While the index for food at home grew by 0.30% in October, the index for food away from home rose by 0.40% in the same period.
Excluding food and energy, the core consumer price index grew by 0.20% m-o-m in October, following a 0.30% rise in the previous month and missing forecasts of a 0.30% increase.
Furthermore, the US consumer price index increased 3.20% y-o-y in October, following a 3.70% rise in the previous month and a notch lower than forecasts of 3.30% growth.
Excluding food and energy, core inflation stood at 4% in October, reflecting the lowest level since September 2021. The energy index fell by 4.50%y-o-y in October, while the food index grew by 3.30% in the same period.
The lower-than-anticipated US inflation data has raised expectations of an end to the monetary tightening cycle. This scenario is expected to keep the pound bullish against the greenback in the short term.
The GBP/USD pair is ascending after consolidating at 1.2105. The next major resistance is anticipated to be only near 1.2580. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate the GBP/USD pair to remain in an uptrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
