The pound sterling lost ground at the start of the European session after the release of weak macroeconomic data in the UK reduced the chances of a more aggressive turn by the Bank of England. Data for March showed Britain’s unemployment rate rose to 3.9%, versus 3.8% expected and a previous reading of 3.8%. In addition, the negative tone of the release was emphasized by a large increase in job claims, which rose to 46.7 thousand against the previous data of 26.5 thousand (more than 49% higher than analysts’ expectations). Salary growth excluding bonuses has also slowed and is expected at 6.7% YoY versus 6.8%. Right now, money markets are pricing in a 30% chance that the rally cycle will halt at the next Bank of England meeting in June.
Preliminary figures from the UK tax office showed the first fall in the total number of people in the workforce in more than two years in April, down by 136,000 people compared to March. Source: ONS (Office for National Statistics, UK).
GBP/USD reacted less to today’s UK data reading, although selling volume has already been largely neutralized. The downside momentum was stopped at the support defined by the 200-period exponential moving average (Golden Curve), which is currently the main support on the H4 interval. Source: Xstation 5.
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