GBPUSD Falls Below 1.26 After Decline in UK Unemployment Rate, FTSE 100 at 8,800
The UK employment report was better than expected, with the unemployment rate ticking lower, yet GBPUSD slipped below 1.25, while FTSE 100 has resumed the bullish trend.
The Office for National Statistics (ONS) in the UK continues to emphasize that its data accuracy is still being refined. Given how long these adjustments have been ongoing, many now see this as a built-in feature rather than a temporary issue. Despite this, the December unemployment rate remained stable as expected, and payrolls showed an increase in January, indicating continued resilience in the labor market.
The most notable development in the report is the strength of wage growth, which remains high. As real wages continue to rise, this poses a challenge for the Bank of England, which is working to bring inflation under control. The persistence of elevated wages could delay any potential interest rate cuts, as policymakers remain cautious about ongoing price pressures.
GBP/USD Chart H4 – Sellers Facing the 20 SMA Now
It has been a relatively quiet session in terms of market-moving news, with few major data releases. However, the UK employment report stood out as a key highlight, alongside geopolitical developments between the United States and Russia. Talks between US and Russian officials in Saudi Arabia lasted for 4.5 hours and were reportedly constructive. Despite progress in discussions, the anticipated Trump-Putin summit scheduled for next week has been called off. However, both sides have engaged in negotiations to determine the conditions for a future meeting, keeping diplomatic channels open.
The stronger-than-expected UK labor market data adds pressure on the Bank of England as it weighs its next policy moves. Meanwhile, diplomatic efforts between the US and Russia remain ongoing, shaping the broader geopolitical landscape. GBP/USD retreated lower, slipping below 1.26 after being quite bullish last week. However buyers couldn’t keep the gains above 1.26, and the price turned lower as risk sentiment improved.
UK Employment Data – December Report by ONS – 18 February 2025![UK WAGES 02-2025]()
Key Figures & Comparisons
Unemployment Rate:
- 4.4% (unchanged from prior) vs 4.5% expected
- Suggests a stable labor market, defying expectations of a slight increase.
Employment Change:
- 107k new jobs added vs 48k expected
- Prior figure was 35k, indicating a strong acceleration in hiring.
- The robust increase suggests labor demand remains resilient despite broader economic concerns.
Average Weekly Earnings (Including Bonus):
- +6.0% vs +5.9% expected
- Previous reading was +5.6%, highlighting continued wage growth pressure.
- Rising wages could support consumer spending but may also complicate the Bank of England’s rate-cut considerations.
Average Weekly Earnings (Excluding Bonus):
- +5.9% (matching expectations) vs prior +5.6%
- Indicates steady wage inflation, which remains above pre-pandemic levels.
January Payrolls Change:
- +21k jobs added, a reversal from prior -47k, which has now been revised to -14k.
- Suggests a modest recovery in hiring momentum at the start of 2025.
The better-than-expected employment data signals continued labor market strength, which may delay expectations of rate cuts by the Bank of England. The resilient wage growth keeps inflationary pressures in focus, potentially influencing the BoE’s monetary policy stance. For markets, the data could provide short-term GBP support, as strong employment figures reduce the urgency for immediate rate cuts. However, broader economic conditions and inflation trends will play a crucial role in shaping expectations moving forward.
GBP/USD Live Chart
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