GBP/USD : UK Unemployment Data

(Tue, 26 Jan 2021). The UK unemployment rate rose to its highest level since 2016 in November and that has contributed to weakness in GBP/USD even though, at 5.0%, it was marginally better than expected. The pair is also under pressure from a firmer US Dollar as concerns rise that the proposed $1.9 trillion US stimulus package may be watered down.

GBP/USD UNDER PRESSURE AFTER UK UNEMPLOYMENT DATA

GBP/USD is sliding in early European business Tuesday after the release of data showing the UK unemployment rate at its highest level since 2016 in November. However, the numbers are not likely to damage the pair longer term as they were marginally better than expected and are, anyway, historic.

Arguably of more importance to the outlook for GBP/USD is a firmer US Dollar on concerns that the proposed $1.9 trillion US pandemic relief plan is facing strong opposition from some Republicans who think it is too large. That has damaged sentiment in the markets and led to a move into safe havens such as USD. More Covid-19 lockdowns are not helping confidence either.

Nonetheless, GBP/USD has trendline support at 1.36 and a bounce at that level would be no surprise as the pair’s upward trajectory remains in place.

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