Pound/dollar: last week's results and forecast for the upcoming period
The pound paired with the dollar held positive all week, while trying to gain a foothold in a higher trading range. If traders buy the pound, then we can expect the exchange rate of the currency pair at 1.3510.
The yield of 10-year UK bonds continued to decline, and now it is at 0.8795%.
In the first half of the week, market participants were waiting for labor market data. It became known that the unemployment rate in July – September fell to the lowest since the second quarter of 2020, to 4.3% from 4.5% in April - June. The average forecast value is 4.4%.
The number of unemployed in the country during this period decreased by 152 thousand people, to 1.45 million. The number of employed people increased by 247 thousand people, to 32.52 million, which was higher than the forecast of experts who expected an increase of 185 thousand people.
According to media reports, in October, in the first month after the completion of the state program for the payment of part of wages to employees on unpaid leave due to the COVID-19 pandemic, the number of employees in British companies increased by 160 thousand, to a record 29.3 million people.
Recall that the Bank of England announced the prospect of a tougher monetary policy. According to the statement, in the coming months it will be necessary to raise the rate from its low level of 0.1% if the economy shows the projected growth.
The British pound rose and overcame the resistance level of 1.3470 after the kingdom's inflation reached a 10-year high last month. Thus, expectations have strengthened that the Bank of England will raise the interest rate next month and become the first central bank of the G7 countries to do so since the beginning of the pandemic.
Consumer prices in October rose in the country by 4.2% year–on-year, which is more than expected - this is a significant jump compared with a 3.1% increase in September. Before that, employment data in the UK came out, exceeding expectations, despite the fact that the government terminated the leave without pay program to protect jobs.
This week, the pound will be sensitive to the publication of the following indices: business activity (PMI) in the manufacturing and services sectors, changes in retail sales and industrial orders. Mr. Jonathan Haskell, a member of the Monetary Policy Committee of the Bank of England, will speak on Thursday.