British Pound (GBP) Price Outlook: GBP/USD Eases Despite Strong UK Jobs Data

• GBP/USD has eased despite better than expected UK employment data.

• That suggests underlying weakness in the pair, although traders may be worried that job losses will rise after the UKs furlough scheme ends.

GBP/USD eased Tuesday to its lowest level for three weeks, dipping back below 1.38, despite a bumper UK labor market report that showed UK employment up by more than economists had expected in May, average earnings including bonuses up by more than predicted in June and a lower than forecast June unemployment rate.

One explanation for the Pound‘s reaction could be that the UK’s furlough scheme to help employees laid off temporarily by the coronavirus pandemic will be phased out by the end of September and its possible that traders are waiting to see whether that pushes job losses back up.

In the meantime, UK inflation data Wednesday will be next focus of attention for GBP traders, with the headline inflation rate expected by economists to dip to 2.3% year/year in July from the previous 2.5%. A larger fall might help persuade the Bank of England that a tightening of UK monetary policy is unnecessary near-term and therefore weaken GBP/USD further.