GBP Gains on Steady Job Data, As USD Stays Stable Post Retail Sales

GBP has risen sharply today, aided by strong job data that has allayed concerns about the impact of the end of the furlough plan. The USD is also strong, thanks to higher-than-expected retail sales. The euro is attempting to recover some of its losses, but it remains weak due to dovish ECB views. Commodity currencies, on the other hand, are weakening due to mixed risk perceptions.

Earlier today, the United Kingdom released positive labor market data. Due to a larger-than-expected 247k increase in employment, the unemployment rate for the three months ending September fell two-tenths of a percent from last month to 4.3 percent, compared to the forecast of 4.4 percent. In October, unemployment claims fell by 14.9 thousand, compared to a revised drop of 85.9 thousand in September.

The improvements occurred after the government’s jobs furlough program finished in September, implying that many of the 1.1 million people who were on the program were able to find work after it ended.

Today’s focus is on retail sales in the United States. The figure increased by 1.7 percent month over month in October, compared to 0.8 percent the previous month, boosting the greenback. Customers are expected to start their holiday shopping earlier this year, despite supply concerns and delivery delays.

Vice President Joe Biden has chosen his nominee for the Federal Reserve Chairmanship. Despite Brainard’s strong qualifications, Powell is the most qualified candidate. Since his inauspicious start, his performance has improved tremendously, and the markets have placed their trust in him.

GBP Maintains Gains Based on UK Job Data

GBP extended last week’s recovery move from over one-month lows, gaining traction for the third day in a row as demand for the GBP increased sharply. The Bank of England (BOE) Governor Andrew Bailey’s overnight hawkish comments were considered as a crucial factor that worked as a tailwind for GBP.

Bailey told the Treasury Select Committee of the UK Parliament that he was concerned about the inflation forecast and that all future policy meetings are now on the table for a rate hike. After the latest UK jobs report indicated that the unemployment rate fell more than expected, to 4.3 percent in September from 4.5 percent in August, intraday buying interest increased.

The number of paid employees climbed by 160,000 in September and October, demonstrating that the end of the government’s furlough program did not impair the job market. The statistics bolstered the case for the Bank of England to raise interest rates by 15 basis points in December, which was considered as a crucial element in the GBP’s positive performance.