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12/08/24
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GBP Flat Before UK Jobs Report
On Monday, the British pound drifted and GBP/USD traded at about 1.2768, up 0.08% for the day early in the North American session.
The UK will release the employment report for the 3 months to June on Tuesday and we may see signs of the labor market cooling. Yearly average earnings that include bonuses, which have drifted between 5.5% and 6% this year, will likely drop sharply to 4.6%. The previous reading was at 5.7%, the lowest since Sept. 2022.
The unemployment rate has stayed the same at 4.4% for the last two readings, the highest since Sept. 2021. Unemployment will likely inch up to 4.5% in the 3 months to June. This would indicate that the labor market is easing.
If the unemployment rate rises and wage growth drops in tomorrow’s report, it would support the Bank of England implementing another rate cut, maybe as early as next month. The BoE will meet again on Sept. 19, a day after the Federal Reserve is generally expected to reduce rates by at least 0.25%.
Earlier this month the BoE joined the central bank trend of lowering rates when it cut rates by 0.25% to 5%. The world has entered a new stage of the central bank cycle, as most of the major central banks have already cut rates.
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