The Pound Sterling (GBP) remains under pressure late Tuesday following weak UK labor market data. The GBP/USD pair remains vulnerable, with the UK Office for National Statistics (ONS) reporting a significant cooling in labor market conditions for the three months ending in February. The Unemployment Rate rose to 4.2% with widespread layoffs.
Impact on BoE Outlook
This jobs data signals increased economic uncertainty, potentially forcing the Bank of England (BoE) to initiate rate cuts earlier than anticipated. Weaker labor conditions can lead to lower wage growth, facilitating disinflation.
Focus Shifts to UK Inflation Data
Further Pound volatility is expected ahead of Wednesday’s UK inflation figures (consumer and producer) for March. Headline Consumer Price Index (CPI) is forecast to decline to 3.1%, while core CPI (excluding volatile food and energy) is expected to fall to 4.1%. Declining inflation data would reinforce expectations of an August BoE rate cut cycle.
Technical Outlook: Temporary Support, Bearish Bias Remains
GBP/USD continues to decline, currently trading near 1.2410. Further losses are likely, targeting the 1.2400 round-level support. The recent breakdown of a Head and Shoulder pattern signals a bearish reversal, with the neckline near 1.2500. The Cable’s long-term outlook has turned bearish with the pair trading below the 200-day Exponential Moving Average (EMA) near 1.2540. A declining Relative Strength Index (RSI) in the bearish range further supports the downside trend.
