GBP/USD pressured ahead of UK jobs and inflation data
- The GBP/USD pair has been under intense pressure lately.
- Boris Johnson has lost some support in his party.
- Focus shifts to the upcoming UK jobs and inflation data.
The GBP/USD pair came under intense pressure as the political circus in the United Kingdom continued. It is trading at 1.3653 ahead of the latest UK jobs, inflation, and retail sales numbers.
Boris Johnson pressured
The political climate in the UK has changed rapidly in the past few weeks. The challenges started when it emerged that Boris Johnson had held some parties at Downing Street in 2020 even as his administration ordered lockdowns.
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Last week, the prime minister was forced to apologize to the queen for damaging the trust of the role. Still, a group of Tory legislators has asked him to resign although he is fighting back.
The risks to the GBP are relatively mild at this stage. Besides, these issues are not expected to have a major impact on the country’s economy. The only major challenge is that they could disrupt Lizz Truss’ Brexit negotiations with the European Union.
The next key catalyst for the GBP/USD will be the latest economic data from the UK. On Tuesday, the Office of National Statistics (ONS) will publish the latest jobs numbers. The data are expected to show that the country’s unemployment rate declined from 4.2% to 4.1% in November.
Additional numbers are expected to reveal that the economy added thousands of jobs while the number of people filing for claims declined.
UK inflation data ahead
After the jobs data, the ONS will next publish the latest UK consumer inflation data. Economists polled by Reuters expect the data to show that prices in the country continued to rise led by energy prices.
For example, the data is expected to show that the headline inflation rose from 5.1% in November to 5.2% in December. Core inflation, which excludes the volatile food and energy prices, is expected to have dropped from 4.0% to 3.9%.
A combination of a rising inflation and falling unemployment rate means that the Bank of England (BOE) will be under pressure to hike interest rates at a faster pace. The bank hiked rates for the first time in Deceber.
Other key catalysts that will move the GBP/USD pair are the upcoming UK retail sales and US housing numbers. Analysts believe that the pair has more upward room to fill in the near term as the Bank of England and Federal Reserve policies converge.