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UK Unemployment Rate Drops Again

GBP is moving higher today against USD as a combination of a weaker Dollar and some better-than-forecast UK data helps lift the pair. The UK unemployment rate was seen falling back to 4.2% through August, below the prior and expected 4.3%. With UK CPI stalling at 6.7% last month and the unemployment rate seen falling lower, traders are wary that the BOE might yet still be forced into tightening further. The bank outlined a desire to hold rates steady at the last meeting though signaled that future decisions would be data dependent. With the November 2nd meeting fast approaching, the question now is whether the BOE hikes again or waits to assess the situation in December.

Mixed UK PMIs

Along with labor market data we also received the latest UK PMI readings today. Notably, manufacturing was seen rising back to 45.2, above the prior 44.3 and expected 44.7 readings. Services, meanwhile, was seen slipping back to 49.2, below the prior 49.3 and expected 49.4 readings. In all, the data wasn’t firmly bullish today though with USD on the backfoot, the drop in UK unemployment looks to be adding to the narrative of fresh BOE uncertainty and should keep GBPUSD supported near-term unless we see a USD rebound.

Technical Views

GBPUSD

The pair is now potentially carving out a double bottom against the 1.2171 level. Price is now once again testing the bull channel top and bulls need to see a break higher here to put focus on a test of the 1.2437 level next, in line with rising momentum studies readings. 
 

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