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UK Jobs Data in Focus as Markets Await Fed Decision

Tuesday commence with UK average earnings and unemployment rate. With inflation pressure for the UK, average earnings and unemployment levels will be of high importance for the UK economy, government and BoE moving forward. Average eararnings reports was expected to fall from 4.1% to 3.9% and employment earnings did come in as forecasted. This is an indication that while inflation levels are rising, mainly cause of higher oil and gas prices, wages are falling behind. This gives people less disposable income and dries up spending. At the same time this morinng unemployment levels stayed on par at 4.9%, better than what markets forecasted of a lift to 5%. Still proving that the UK job market is struggling and that people are finding difficulties to get in the job market.

Today will mainly be the lead up ahead of tomorrow and the Federal Reserve interest rate decision. Markets are currently pricing in a 95% chance of a rate hike. We have seen USD strength in the last week and it has continued today. With the Federal Reserve not giving forward guidance, no one knows for certain what monetary action will be taken tomorrow. Markets highly believe that a rate hike is happening, so lets look into three different scenarios.

Fed hike 25 basis points and continue to put the lid on of future guidance. This will likely not lead to much USD movement, as markets have priced in a hike and there won’t be any comments for markets to speculate on future actions
Federal Reserve hike with 25 basis points and highlight that further rate hikes are required in December and potentially in March 2027, we can see USD strength on the back of this situation
Federal Reserve hold off with interest rates movements. This would lead to strong USD weakness. 95% of markets do predict a hike tomorrow and if they would hold off, the recent USD gains will be wiped out.

Today is vital for USD clients. Markets are very unpredictable and until we know the outcome tomorrow, there is no certainty of in which direction it can go.

GBP/EUR 1.1666 GBP/USD 1.3463 GBP/AED 4.9488

GBP/AUD 1.8896 GBP/CHF 1.1001 GBP/CAD 1.8723
GBP/NZD 2.3345 EUR/USD 1.1525 GBP/ZAR 21.9869

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