GBP/USD Price Analysis: Weaker Jobs Ignite BoE Rate Cut Bets

• UK wage growth, excluding bonuses, cooled in September. 

• The UK unemployment rate rose to 4.3% after a previous reading of 4.1%.

• Sterling has lost 1.1% of its value amid the Trump trade.

The GBP/USD price analysis indicates a weaker UK labor market, increasing expectations for BoE rate cuts. At the same time, the pair is dropping as the dollar’s Trump trade rally continues. 

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Data on Tuesday revealed that UK wage growth, excluding bonuses, cooled, and unemployment rose. In September, the unemployment rate rose to 4.3% after a previous reading of 4.1%. Meanwhile, unemployment claims edged up from 10,100 to 26,700. The labor market drives a considerable part of the economy. 

Therefore, weakness in this sector is a big motivator for the Bank of England to continue lowering borrowing costs. However, the recent government budget raised the chances of a spike in inflation, which might keep policymakers cautious.  

On the other hand, dollar strength since Trump won the US election put downward pressure on the GBP/USD pair. Sterling has lost 1.1% of its value amid the Trump trade. The new US president has proposed policy changes to boost the US economy in the long run.

Bigger tax cuts and tariffs on imported goods will benefit local businesses, heating up the economy. If this happens before inflation hits the 2% target, the Fed might be forced to pause its rate cuts and assess the situation. A cautious or hawkish shift will be bullish for the dollar. 

Meanwhile, traders are holding their breath before October’s inflation figures, which will shape the outlook for the December Fed meeting. 

GBP/USD key events today

No key events will come after the UK employment figures. Therefore, traders will await tomorrow’s US inflation report.

GBP/USD technical price analysis: Downtrend resumes after short pause

On the technical side, the GBP/USD price has broken below the 1.2850 support level to make a lower low. Moreover, it has made a strong swing below the 30-SMA, a sign that bears are in the lead. Meanwhile, the RSI trades near the oversold region, indicating solid bearish momentum. 

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Initially, the price was in a downtrend before it paused to consolidate between the 1.2850 support and the 1.3000 resistance. Therefore, the break below the range resistance signals a continuation of the downtrend.

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