GBP mixed amid weak UK labor market – BBH

💡 DMK Insight

The pound’s mixed performance signals a critical moment for traders: job losses are rising, and that’s affecting sentiment. With the UK labor market showing persistent weakness, particularly in December, traders should be cautious. The pound’s rise against the dollar might seem positive, but slipping against the euro suggests underlying vulnerabilities. If job losses continue to accelerate into 2025, we could see further pressure on the pound, especially if the Bank of England feels compelled to adjust interest rates. Keep an eye on the 1.30 level against the dollar; a drop below this could trigger more selling. Conversely, if the pound manages to hold its ground, it could indicate a potential reversal. The flip side is that if the eurozone also faces economic challenges, the euro might not hold its strength for long. Watch for correlations between UK labor data and eurozone indicators, as they could amplify volatility across both currencies. Immediate focus should be on upcoming labor reports and any comments from the Bank of England regarding monetary policy adjustments.