Ahead of crucial US data, the GBP/USD drops
The Pound Sterling Loses Ground to Dollar as UK Wages Slow
UK Wages and Jobs Market
The Pound Sterling has been losing value compared to the dollar in recent trading sessions. This is because UK wages are not growing as quickly as expected, and although the jobs market has improved slightly, it is still not enough. Central banks pay close attention to UK wage growth because they want to avoid a situation where wages increase too quickly and cause prices to rise. In August, UK wages rose at a slower pace than expected, which has led many people to believe that the Bank of England (BoE) will not raise interest rates again.
Unemployment Rate and Monetary Policy
Although the unemployment rate in the UK has gone down slightly from 4.3% to 4.2%, the overall trend shows that the job market is not doing as well as before. This is usually a sign that the government’s policies to control the economy are working, but it also means that prices might not go up as much.
Predictions for GBP/USD
The attempt to increase the value of the pound against the dollar has not been successful. In fact, it has started to go down again. It is likely that the GBP/USD pair will test support at the previous low of 1.2039, and it might even go as low as 1.2000.
US Data and Pound Strength
With important data coming from the US, it is expected that the pound will continue to weaken against the dollar. Recent data from the US has shown positive surprises, such as strong job numbers and retail sales. If there is another positive surprise, it could further strengthen the US dollar. Resistance is expected at 1.2200.
Retail Trader Sentiment
According to data from retail traders, 73.82% of them are betting that the pound will strengthen against the dollar. However, we usually take the opposite view of what most traders believe. Since most traders are betting on the pound, it suggests that the pound will actually continue to weaken.
The number of traders betting on the pound has increased slightly compared to yesterday and last week. This, combined with the current sentiment, indicates that the pound is likely to continue to weaken against the dollar.
Upcoming US Data
At 13:30, the market will focus on the Q3 GDP data, which is expected to show an upward revision from 4.1% to 4.3%. This could lead to a stronger dollar if the data is good. On Friday, the PCE inflation data will be released, which will also have an impact on the dollar. Recent US data has shown positive surprises, so there is a chance that the dollar will strengthen even more.