The British pound has been highly volatile today. The GBPUSD pair dropped from 1.323 to 1.314. The reason for this drop was the publication of British employment data. The claimant count in June significantly exceeded market expectations (2.3k) to reach 7.8k. While the number of employed increased over the course of the month, it fell short of expectations. The market had expected the number of employed to increase by 150k while only managing 137k.
For market participants, weaker unemployment data could mean that the Bank of England will slow down with their rate hike trajectory and tightening of monetary policy. This is one of the key factors that influence the regulator’s decisions.
In addition to the dollar, the pound is also losing ground against the euro, with the EURGBP pair trading at around 0.88. The pound should remain weakened for the rest of today’s trading, and it could continue dropping into tomorrow’s session. This is made the more likely given that data for another key indicator; inflation, is set to be published tomorrow morning.
As for the EURUSD pair, markets are relatively calm today. Tomorrow will be more eventful and interesting in this regard, with news developments and data releases bound to cause some movements. For today, though, I think the pair will keep trading within a range of 1.168 – 1.173.