GBP Price, UK Jobs News & Analysis:

• The latest UK jobs report was stronger than economists predicted, with jobs exceeding expectations, unemployment rates falling and average incomes above expectations.
• This has made an interest rate hike by the Bank of England next month almost certain, although markets aren’t sure how big it will be.
• In turn, this has helped the GBP / USD pair recoup a very small portion of its recent losses, although the pair’s trend is still down for now.

GBP / USD helped by outstanding UK employment report

GBP / USD edged higher after an exceptional run of UK employment figures, although the pair’s trend remains downward.

GBP / USD price table, 1 hour period (3-16 November 2021)

Source: IG (You can click this for a larger image)

Strong UK employment data

Looking at the data in detail, employment rose more than expected in August and the unemployment rate fell more than expected in September. Average earnings including premiums increased less month to month in September, but still increased more than expected.

Source: DailyFX calendar

Rising interest rates in the UK

The figures make almost certain an interest rate hike by the Bank of England’s Monetary Policy Committee at its next meeting on December 16, although rate changes are unusual on days when the MPC meets but that ‘no monetary policy report is released at the same time.

Market prices currently suggest about a 67% chance of a 0.30% rate hike from the current 0.10%, and about 32% of a smaller bank rate hike. at 0.20%. That said, GBP / USD’s reaction has been only slightly positive and there is no sign of a significant rally yet after the pair’s recent losses. Indeed, a “buy the rumor, sell the fact” movement seems likely even if the BoE decides that a 20 basis point hike is necessary.

Retail traders still long GBP / USD

Regarding the positioning of retail traders, IG’s client sentiment data for GBP / USD spectacle 71.58% of traders are net-long, with the ratio of long to short traders of 2.52 to 1. The number of net-long traders is 2.55% lower than yesterday corn 19.35% higher than last week, when the number of net-short traders is 25.00% higher than yesterday corn 0.41% less than Last week.

Here at DailyFX wWe generally take a contrarian view of crowd sentiment, and the fact that traders are net long suggests that GBP / USD prices may continue to decline. However, pThe positioning is shorter on the net than yesterday but longer on the net than last week. The combination of current sentiment and recent changes gives us a mixed GBP / USD trade bias.

– Written by Martin Essex, Analyst

Please feel free to contact me on Twitter @MartinSEssex