GBPUSD is moving in the Ascending Triangle and the market has reached the higher low area of the pattern
The Pound Sterling (GBP) made a sharp comeback against its major rivals after the latest UK employment data showed a stronger-than-expected job market. The United Kingdom added a remarkable 107,000 new jobs, while the unemployment rate held steady at 4.4%, beating expectations.
This positive labor market data has given the British currency a much-needed boost, easing concerns about economic sluggishness. Now, all eyes are on the upcoming UK inflation data (CPI) and the Federal Reserve’s FOMC minutes, which could influence future market movements.
Let’s dive deeper into what’s happening with the UK job market, what this means for the economy, and what’s coming next for the Pound Sterling.
UK Job Market Defies Expectations – A Strong Recovery
The latest UK employment figures brought a pleasant surprise for investors. The economy added 107,000 new jobs in the three months ending December, significantly outpacing the previous period’s 35,000 jobs. This impressive growth signals resilience in the labor market despite economic uncertainties.
Unemployment Rate Holds Steady
Despite predictions that the UK unemployment rate would tick up to 4.5%, it remained unchanged at 4.4%. This stability suggests that businesses are still hiring, even amid concerns over economic growth and policy changes.
One major concern for businesses has been the increase in employers’ National Insurance (NI) contributions, announced by Chancellor Rachel Reeves. From April, employers will have to pay 15% instead of the previous 13.8%, putting additional pressure on company budgets. However, despite these challenges, the job market has remained surprisingly strong.
Wages Are Rising – What Does It Mean for Inflation?
Another key takeaway from the report was wage growth, which showed strong momentum:
- Average earnings (excluding bonuses) jumped to 5.9%, up from 5.6%.
- Average earnings (including bonuses) rose to 6%, surpassing expectations.
This rapid wage growth could have a direct impact on inflation expectations. When wages rise, people have more spending power, which can drive up demand for goods and services, pushing prices higher.
As a result, the Bank of England (BoE) may have to maintain its high interest rates for longer to keep inflation under control. Investors are watching closely to see if this wage momentum continues in the coming months.
What’s Next? Key Data to Watch
Now that we have a better picture of the UK labor market, what’s next for the Pound? There are two major events this week that could shape market trends:
1. UK Inflation Report (CPI Data)
The next big test for the British economy will be the UK Consumer Price Index (CPI) data, set to be released on Wednesday. This report will show how much prices have risen in January. If inflation remains stubbornly high, the BoE may delay any potential interest rate cuts, keeping borrowing costs elevated.
GBPUSD is moving in an Ascending channel and the market has reached the higher high area of the channel
2. US Federal Reserve FOMC Minutes
On the same day, the US Federal Reserve will release its FOMC meeting minutes, giving investors insights into its future interest rate policy. The US central bank has been cautious about rate cuts, and any hints of prolonged high interest rates could impact currency markets, including the Pound Sterling vs. US Dollar (GBP/USD) pair.
How the Pound Sterling Reacted to the News
Following the upbeat jobs report, the Pound Sterling managed to recover significant losses against the US Dollar and other major currencies. Earlier in the day, GBP struggled as the US Dollar rebounded, but the strong employment data helped Sterling regain ground.
The US Dollar’s Influence on GBP/USD
The US Dollar Index (DXY), which measures the Greenback’s strength against other currencies, has been climbing recently. A stronger US Dollar often weighs on GBP/USD, making it harder for the Pound to gain ground.
A few factors are keeping the US Dollar strong:
- Persistent inflation concerns in the United States.
- US trade policies, including tariffs on steel, aluminum, and Chinese imports.
- Federal Reserve’s cautious approach to interest rate cuts.
GBPUSD is moving in a descending channel and the market has fallen from the lower high area of the channel
If the Fed signals that interest rates will stay higher for longer, the US Dollar could strengthen further, making it tougher for the Pound to sustain its gains. However, if the UK CPI data surprises to the upside, it could provide further support for the British currency.
Final Thoughts – What Should Investors Expect?
The UK job market is showing remarkable resilience, with strong job growth and rising wages supporting the economy. However, inflation remains a key concern, and the Bank of England may have to keep interest rates high to prevent prices from spiraling further.
In the short term, the focus will be on:
- UK CPI inflation data – If inflation remains high, GBP could strengthen further.
- FOMC minutes – Any signals about the Fed’s future policy could impact currency markets.
- US Dollar trends – A stronger USD could limit GBP’s recovery.
For now, the Pound Sterling has bounced back strongly, but its next moves will depend on upcoming economic data and global market sentiment. Whether the rally continues or fades will depend on how inflation and central bank policies play out in the coming weeks.
Don’t trade all the time, trade forex only at the confirmed trade setups
Get more confirmed trade signals at premium or supreme – Click here to get more signals, 2200%, 800% growth in Real Live USD trading account of our users – click here to see , or If you want to get FREE Trial signals, You can Join FREE Signals Now!
