The unemployment rate rose to 5.0%, higher than expectations (4.9%) and the previous reading (4.8%). This marks the highest level since 2021. At the same time, average earnings including bonuses grew by 4.8%, below both expectations and the previous reading (5.0%), which supports the likelihood of the Bank of England cutting interest rates in its December meeting.
Additionally, the UK finance minister indicated that she is preparing to raise taxes, including income taxes, despite earlier promises not to increase them before the elections, due to the deteriorating economic situation.
The GBP/USD pair recorded 1.3010 on November 4, its lowest level since April 11, 2025, and is currently trading near 1.3100. Nevertheless, the pair remains up by around 5% year-to-date.
UK bond yields (UK Gilts) saw a significant decline across various maturities yesterday following the weaker-than-expected labor and wage data, prompting increased investor demand for UK bonds. The 2-year yield fell to 3.72%, its lowest level since August 23, 2024, while the 10-year yield dropped to 4.38%.
Another key factor contributing to the downward momentum in GBP/USD is the slight recovery of the US dollar against most major currencies.
From a technical perspective, if the pivot point at 1.3150 is broken, the GBP/USD pair may target support levels at 1.3114, 1.3079, and 1.3043. Conversely, if the pair moves above the pivot point, it may test resistance levels at 1.3185, 1.3221, and 1.3256.
The Relative Strength Index (RSI) is currently around 38, indicating negative momentum for the pair. In addition, a bearish crossover between the MACD line and the signal line suggests a continuation of the downward momentum.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
