The number of jobless claims in the UK expanded from 8.9k to 16.0k in November 2023.

Sterling weakened against several other major currencies following the release of UK labor market data on Tuesday (12/December). GBP/JPY fell nearly 0.5%, while EUR/GBP soared to its highest level in a week. GBP/USD corrected limited to the 1.2550s range, as market participants await the Fed's FOMC meeting tomorrow.

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The UK Office for National Statistics (ONS) reported that the number of monthly jobless claims swelled from 8.9k to 16.0k in November 2023, whereas the consensus only anticipated a rise to 15.0k. This was a disappointing development, despite the UK unemployment rate stagnating at 4.2 percent in the period to October 2023.

The Average Earnings Plus Bonus and No Bonus indices also declined more sharply than expected. The Average Earnings Plus Bonus Index slid from 8.0 percent to 7.2 percent, while the No Bonus data declined from 7.8 percent to 7.3 percent.

This package of UK labor market data had a generally negative impact on the pound sterling. However, analysts argued that the figures were not bad enough to prompt the Bank of England (BoE) to start discussing interest rate cuts.

"The slowdown in wage growth is becoming more apparent with each passing month, but the MPC (BoE) will likely wait for signs that this trend will persist until the early 2024 pay rounds before signaling that it will cut the Bank Rate soon," said Samuel Tombs, Chief UK Economist at Pantheon Macroeconomics.

Market participants are currently waiting for the announcement of the Fed's FOMC meeting results so most traders tend to choose to pull over rather than open new trading positions. If the Fed signals an early interest rate cut, GBP/USD has the potential to surge. Conversely, GBP/USD may remain sluggish if the market believes the BoE will cut interest rates earlier than the Fed.