Forex Today: Pound Sterling declines after UK jobs report, eyes on US data
Here is what you need to know on Tuesday, November 11:
Pound Sterling comes under bearish pressure in the European morning Tuesday as markets assess the UK labor market data. In the second half of the day, NFIC Business Optimism Index for November and the weekly ADP Employment Change data will be featured in the US economic calendar.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.32% | 0.09% | 0.14% | 0.30% | 0.20% | -0.05% | |
| EUR | -0.07% | 0.26% | 0.00% | 0.07% | 0.24% | 0.13% | -0.11% | |
| GBP | -0.32% | -0.26% | -0.24% | -0.18% | -0.04% | -0.12% | -0.36% | |
| JPY | -0.09% | 0.00% | 0.24% | 0.04% | 0.21% | 0.10% | -0.13% | |
| CAD | -0.14% | -0.07% | 0.18% | -0.04% | 0.17% | 0.06% | -0.18% | |
| AUD | -0.30% | -0.24% | 0.04% | -0.21% | -0.17% | -0.10% | -0.39% | |
| NZD | -0.20% | -0.13% | 0.12% | -0.10% | -0.06% | 0.10% | -0.24% | |
| CHF | 0.05% | 0.11% | 0.36% | 0.13% | 0.18% | 0.39% | 0.24% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
The UK's Office for National Statistics reported that the ILO Unemployment Rate climbed to 5% in the three months to September from 4.8%. This print came in worse than the market expectation of 4.9%. Other details of the publication showed that the Employment Change in this period was -21K, while the annual wage inflation, as measured by the Average Earnings Including Bonus, was 4.8%, down from 5%. After closing the fourth consecutive day in positive territory on Monday, GBP/USD turns south after this data and was last seen losing 035% on the day at 1.3130.
Wall Street's main indexes rallied on Monday as investors cheered the imminent reopening of the US government. Early Tuesday, US stock index futures trade mixed, while the US Dollar (USD) Index clings to marginal gains near 99.70 after closing virtually unchanged on Monday. The funding bill, which was approved by the Senate, will head to the House of Representatives for a final approval on Wednesday.
EUR/USD struggles to find direction and continues to move sideways at around 1.1550 early Tuesday. Business sentiment data from Germany and the Eurozone will be watched closely by market participants. Additionally, several European Central Bank (ECB) policymakers, including ECB President Christine Lagarde, are scheduled to deliver speeches later in the day.
New Zealand's inflation expectation on a 12-month time frame rose to 2.39% in the fourth quarter from 2.37% in the third quarter, and it was unchanged at 2.28% on a two-year time frame, the Reserve Bank of New Zealand’s (RBNZ) latest monetary conditions survey showed on Tuesday. NZD/USD edges lower in the European morning on Tuesday and trades below 0.5650.
Japan's Economics Minister Minoru Kiuchi said on Tuesday that he is aware of high inflation weighing on private consumption, and added that the weak Japanese Yen (JPY) raises prices via increased import costs. After gaining nearly 0.5% on Monday, USD/JPY stays in a consolidation phase and trades above 154.00.
Gold started the week on a bullish note and rose nearly 3% on a daily basis. XAU/USD holds its ground early Tuesday and trades comfortably above $4,100.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
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