Pound Retreats from Daily Highs on Weak UK Labor Market Report

The British pound today retreated from daily highs set against the US dollar earlier in the European session after the release of the UK labour market report for December. The pound’s decline against the US dollar was triggered by the jobless claims count, which posted a surprising increase in November.

The GBP/USD currency pair retreated from a high of 1.3368 set just before the release of the employment report to hit an intra-day low of 1.3332.

The currency pair lost its upward momentum after the December employment report released by the Office for National Statistics revealed that the number of jobless claims had risen to 5,900 in November, which was higher than the expected 3,200. The unemployment rate was 4.3%, down from 4.8% for a year earlier and the joint lowest since 1975, but could not stop the pair’s decline. The average weekly earnings change for October was in line with expectations by coming in at 2.5%, which was slightly higher than the previous reading of 2.3%.

The pair’s decline was largely caused by the UK labour report given that the US Dollar Index had retreated from yesterday’s highs to hit a low of 93.89. The greenback’s weakness was caused by the Democrats’ win in Alabama Senate elections held yesterday, which raised concerns as to whether President Donald Trump could pass his tax reform bill.

The currency pair’s short-term performance is likely to be affected by the release of US CPI data and the FOMC rate decision, both scheduled for later today.

The GBP/USD currency pair was trading at 1.3345 as at 11:02 GMT having declined from a daily high of 1.3368. The GBP/JPY currency pair was trading at 151.32 having rallied from a low of 150.81.

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