The data comes hot off the heels of yesterday’s UK jobs report which registered an alarming 50k claimants seeking unemployment benefits and an unemployment rate of 4.4%, up from 3.3%.
The data does very little to support Rishi Sunak in his Tory Party’s desperate attempts to win back the voter base after polls show overwhelming support for the Labour Party. The cost of living crisis, anaemic growth, and a string of missteps from party officials have contributed to the shift away from the governing party with the elections scheduled for the 4th of July this year.
Sterling Reveals a Slight Reprieve from Recent Bearish Pressure as All Eyes Turn to US CPI, FOMC
Cable (GBP/USD) has managed to halt the recent decline spurred on by Friday’s hot NFP print in the US. The move may be due to a squaring off of positions ahead of what is a very uncertain and potentially volatile trading session. High impact data out of the US today (US CPI and the FOMC statement and forecasts) has the full attention of the market.
Stubborn inflation is likely to add to the loss of confidence amongst the committee when it comes to inflation returning to the 2% target. Hot monthly CPI for most of 2024 has forced the Fed to manage their expectations around the number and timing of Fed funds rate cuts this year. If this continues to be the case, GBP/USD may be vulnerable to a move lower but such a move could be limited by the fact the FOMC dot plot is due to be released a few hours later.
GBP/USD found support at 1.2736, remaining within the ascending channel. Upside levels of interest appear at 1.2800 and 1.2895. Conversely, an encouraging CPI print (lower CPI than expected) can add to the reprieve seen in the pair recently.
GBP/USD Daily Chart
Source: TradingView, prepared by Richard Snow
