Pound US Dollar Exchange Rate Strikes Fresh Low following Downbeat UK Jobs Data

November 13, 2024 - Written by David Woodsmith

STORY LINK Pound US Dollar Exchange Rate Strikes Fresh Low following Downbeat UK Jobs Data

The Pound US Dollar (GBP/USD) exchange rate fell on Tuesday, striking a fresh three-month low, following the UK’s latest labour market report.

The Pound (GBP) declined on Tuesday following the UK's latest labour market report, which revealed a sharper-than-expected increase in unemployment.

The UK unemployment rate rose from 4% to 4.3% in the third quarter, surpassing predictions of a smaller increase to 4.1%. This suggests that the British labour market is continuing to lose momentum.

Meanwhile, wage growth decelerated to its slowest pace in over two years, although it did exceed forecasts and remains above historical averages.

The data weighed on the Pound, but the resilience in wage growth helped to contain GBP's downturn.

Meanwhile, the US Dollar (USD) continued to draw strength from the US elections, with the Republican Party looking as though it would retain control of the House, having already won the White House and the Senate.

Securing both chambers would pave the way for President-Elect Donald Trump to press ahead with planned tax cuts, trade tariffs and looser energy regulations.

These policies are expected to provide a near-term boost to the US economy. Additionally, the measures could drive up inflation, potentially forcing the Federal Reserve to keep US interest rates higher for longer.

This political and economic landscape continued to fuel the US Dollar's strength throughout Tuesday's trading session.

Looking ahead, on Wednesday the upcoming US consumer price index could drive the US Dollar to fresh multi-month highs.

Analysts anticipate that the CPI numbers will show a rise in headline inflation from 2.4% to 2.6% in October, which would be the first increase in seven months. Should this happen, it could strengthen expectations that the Fed might decelerate its pace of interest rate cuts.

Conversely, if inflation falls short of predictions, the US Dollar might falter.

Across the Atlantic, GBP investors may turn their attention to the UK's third-quarter GDP figures, set to be released on Friday. This focus could keep the Pound in check until then.

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TAGS: Pound Dollar Forecasts