ExchangeRates.org.uk - At the time of writing the GBP/USD was trading at around $1.2686, virtually unchanged from Tuesday’s opening levels.On Tuesday, the Pound (GBP) strengthened against most of its major trading partners after the release of the UK's latest employment data.
The unemployment rate for the three months ending in October remained unchanged at 4.3%, aligning with market predictions.
However, a key highlight was the average earnings index (excluding bonuses), which saw a rise from 4.9% to 5.2%, exceeding the 5% expectation.
This boost in wage growth dampened expectations of an interest rate cut by the Bank of England (BoE), which in turn supported the Pound's performance throughout the European trading session.
The US Dollar (USD) also climbed against the majority of its counterparts on Tuesday following the publication of the country’s latest retail sales data.
November’s index rose from a previous reading of 0.5% to 0.7%, ahead of a more modest expectation that it would remain the same, pointing to robust levels of consumer spending in the US.
The better-than-expected data release, alongside a cautious market mood, saw the safe-haven USD firm against the majority of its peers.
Looking ahead, the primary catalyst of movement for the Pound US Dollar exchange rate looking ahead to Wednesday will likely be the Federal Reserve’s upcoming interest rate decision.
As the central bank is widely expected to deliver a 25-basis point interest rate cut, USD investors will focus on the Fed’s forward guidance.
Should any Fed officials adopt a dovish tone regarding the future of monetary policy, USD exchange rates could slump during mid-week trade.
In the UK, the November consumer price index (CPI) is expected to reveal an uptick in both headline and core inflation.
Should the data meet these forecasts, it could provide additional support to the Pound, potentially boosting GBP exchange rates by further reducing the chances of interest rate cuts by the Bank of England.
This content was originally published on ExchangeRates.org.uk