Home ForexForecasts GBP/USD eyes Bailey and jobs report

GBP/USD eyes Bailey and jobs report

by SuperiorInvest

The British pound shows limited movement at the start of the week. In the North American session on Monday, it remains unchanged at 1.2629.

Bank of England Governor Andrew Bailey will speak at a public event today and markets will be listening closely, looking for clues about the future path of Bank of England rates. The BOE kept rates unchanged at 5.25% for the fifth consecutive time at the Jan. 31 meeting, as expected. However, the MPC vote was a surprise, with a three-way split. This indicates a divergence of opinion among MPC members as to the future path of rates.

Inflation is running at a pace of 3.9%, well above the 2% target, and keeping rates in restrictive territory should bring inflation down. At the same time, high interest rates could push the weak UK economy into recession, with weary homeowners seeking relief from high mortgage payments.

After Bailey's comments, market attention will turn to Tuesday's jobs report. The labor market has been cooling but remains in good shape and strong wage growth continues to drive inflation, posing a major headache for the Bank of England.

The economy is projected to have added 73,000 jobs in the three months through December, compared with 108,000 in the three months through November. Unemployment is expected to rise to 4.0%, up from 3.9%, while average earnings, including bonuses, are forecast to decline to 5.6%, up from 6.5%.

The Federal Reserve may have signaled that rate cuts are coming, but it has remained aggressive and continues to push back against market expectations of a rate cut. In December, the odds of the Fed cutting rates in March were above 70%, but the odds have dropped to just 15% as the U.S. economy remains surprisingly strong and Fed members have declined. hopes of a cut in March. Today we will hear from Richmond Federal Reserve President Thomas Barkin. Last week, Barkin said he wants to be sure inflation is clearly headed toward 2% before supporting lowering rates, and his comments today will likely reflect this stance.

GBP/USD Technical

  • There is resistance at 1.2675 and 1.2723.
  • There is support at 1.2597 and 1.2550
GBP/USD-Daily Chart

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