Pound jumps on strong wage growth figures
|Investor sentiment towards the British Pound brightened on Tuesdayfollowing news that wage growth in the UK accelerated at the fastest pace in almost a decade.
According to official reports published by the Office of National Statistics, average earnings jumped by 3.1% in the three months to August while total pay including bonuses rose by 2.7% during the quarter. Attraction towards the Pound was also boosted by the unemployment rate, which remained steady at 4% - the lowest level in 43 years. Although today’s labour figures point to signs of inflationary pressures and reinforce expectations over the BoE raising interest rates gradually over the coming years, the main focus revolves around Brexit.
Uncertainty over Brexit negotiations remains the biggest drag on the British Pound and is likely to cap any meaningful upside gains created by positive economic fundamentals. Sterling could be instore for a world of pain if no real progress is made on Brexit at Wednesday’s EU summit in Brussels.
In regards to the technical perspective, the GBPUSD hit the ground running today with prices pushing above 1.3200 following the UK labour report. The solid breakout above the 1.3200 is a bullish signal that opens a path towards 1.3240 and 1.3290, respectively.
Dollar Index gearing to break below 95.00?
Dollar bulls were missing in action today after disappointing U.S retail sales data overnight discouraged investors from buying the Greenback.
With the economic calendar relatively light in terms of tier-1 data from the United States, the Dollar is likely to be driven by price action today. Focusing on the technical picture, the Dollar Index remains extremely shaky above the 95.00 support level. A solid breakdown and daily close below this support may open a clean path towards 94.60 and possibly 94.35.
Commodity spotlight – Gold
A combination of factors ranging from depressed equity markets, trade disputes, global growth fears and geopolitical tensions have brought Gold back into fashion.
The yellow metal found comfort near three-month highs on Tuesday as risk-averse investors sought safety in the metal amid market uncertainty. With a weakening US Dollar adding to the factors boosting appetite for the yellow metal, further appreciation is in the cards for the near term. The technical picture turned bullish on the daily charts after bulls secured a weekly close above $1,213. Technical traders will keep a close eye on how prices behave around the $1,233.50 level. A solid breakout above this point opens the gates to $1,240.
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