GBP Under Pressure As Wages & Unemployment Rise

Wages Rise AgainFocus is back on the BOE today after the latest set of UK employment data released this morning. The Office for National Statistics reported that average wages (excluding bonuses) rose 7.8 % higher in the three months through July when compared with the same period a year earlier. This marks the fastest pace of wage growth on record in the UK. Indeed, total wages were seen rising 8.5% over the same period, the second highest figure on record outside of the post-pandemic rebound.Unemployment RisingWhile wages were seen rising, the number of people employed was seen plunging with the unemployment rate rising to 4.3% from 4.2% prior. The data reflects the difficult conditions in the UK currently, with job vacancies falling below the 1 million level for the first time in two years.Hard Call for BOEThe BOE is faced with the hard task of needing to bring inflation down while attempting to avoid a hard landing in the UK. Traders are this month expecting the BOE to hike rates for the 15th consecutive time. While speculation has been building that this month’s hike might prove to be the last, this latest wages data shows that upward inflationary pressure is still clear within the economy.As such, hawkish risks are now rising ahead of the meeting with the latest UK CPI data still to come ahead of the BOE event. Despite this, GBP looks likely to remain pressured near-term as deteriorating UK growth projections weigh on sentiment.Technical ViewsGBPUSDThe correction lower in GBPUSD has seen the market breaking below the rising trend line from YTD lows as well as the latest support at 1.2659. Price is now testing the 1.2437 level support and with momentum studies bearish, risks are skewed towards a break lower. Below here, 1.1843 is the longer-run downside target.