empty
16.06.2025 07:36 PM
The Pound Ignores Weak Data and Persistently Tries to Continue Rising

The macroeconomic data from the UK published last week looks frankly weak—everything is in the red zone, meaning worse than expected. Nevertheless, the pound continues to climb upward regardless.

The labor market report came in noticeably worse than expected—the number of jobless claims surged sharply (+33.1K in May versus -21.2K in April), and the ratio of vacancies to the unemployment rate is rapidly declining, now worse than pre-COVID levels. Average wage growth fell short of forecasts, which typically leads to a weaker currency since it indirectly signals a potential slowdown in inflation. But not this time—the pound seemed to ignore the weak data and continued its determined upward move.

This image is no longer relevant

The trade balance worsened in April, monthly GDP growth came in at -0.3% (i.e., negative), service sector activity slowed, and industrial production data for April was also in the red. The market may not be interpreting these indicators as a sign of economic weakness, perhaps viewing them as a temporary response to the new trade policy introduced by Trump. The chance that the UK will be able to "strike a deal" appears higher than for China, Mexico, or the EU, and thus the situation might normalize soon. Whether that's the case or not, as usual, time will tell. For now, the main focus remains on high inflation. The market needs to see signs of its slowdown before revising interest rate forecasts.

The Bank of England will hold its monetary policy meeting on Thursday, June 19. Market expectations are neutral, with the rate projected to remain unchanged at 4.25%. This meeting is considered uneventful, as no updated forecasts will be presented and no press conference will follow the statement.

The main risk lies in the vote distribution. The current forecast is 7 votes for no change and 2 votes for a rate cut. However, if more members vote for a cut—3 or 4—the market will interpret this as dovish, and the pound will likely react with a decline. Otherwise, the reaction will be neutral or even slightly positive.

If anything has changed since the last meeting in May, it has been for the worse—the labor market appears weaker, wage growth is below expectations, and GDP growth is also slower. At this point, the market expects a 50 basis point rate cut by the end of the year, with the December rate projected at 3.7%, and this forecast is already priced in.

The net long position on GBP increased by 1.4 billion over the reporting week, reaching 4.4 billion. At the same time, the estimated price has not been able to break away from the long-term average. This is mainly due to the underperformance of the UK government bond yield curve compared to US Treasuries.

This image is no longer relevant

The week before, we noted that the chances of a bullish impulse had increased and set a target at 1.3650. Over the past period, the pound has approached that level closely. We assume there will be an attempt to break above the resistance, but the chances of a continued move look unconvincing for now, and a correction is more likely. We see support at 1.3443, and there is a good chance the pound will remain above it, but there is currently no strong basis for a major upward surge—unless, of course, the Bank of England provides one on Thursday.

Kuvat Raharjo,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Evgeny Klimov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

EUR/USD – Analysis and Forecast

Today, the pair is retreating from its daily high. According to European Commission officials, the EU and the US are close to reaching an agreement that would include 15% tariffs

Irina Yanina 14:00 2025-07-24 UTC+2

USD/JPY – Analysis and Forecast

Today, the pair broke a three-day losing streak, as Japan's domestic political uncertainty, disappointing manufacturing PMI data, and prevailing risk appetite remain key factors limiting the yen's growth

Irina Yanina 13:55 2025-07-24 UTC+2

XAU/USD – Analysis and Forecast

Currently, gold continues to lose ground. Recent news of progress in trade negotiations between the United States and Japan, as well as reports that the US and the European Union

Irina Yanina 12:23 2025-07-24 UTC+2

USD/CHF – Analysis and Forecast

The uncertainty regarding the Federal Reserve's policy is holding back the growth of the U.S. dollar, while trade-related optimism continues to undermine the Swiss franc's status as a safe-haven asset

Irina Yanina 11:43 2025-07-24 UTC+2

Why Isn't the Euro Falling Against the US Dollar? (There Is a Possibility of Limited Downside in EUR/USD and GBP/USD)

The euro continues to show steady growth against the dollar, which may seem irrational at first glance, but there are significant reasons behind this. Let's examine them. Today, the European

Pati Gani 09:47 2025-07-24 UTC+2

The Market Has Made It Clear

The economy remains strong, and U.S. trade deals with other countries are bringing clarity. What could be better for the S&P 500? Perhaps a fireworks display of corporate earnings that

Marek Petkovich 08:57 2025-07-24 UTC+2

What to Pay Attention to on July 24? A Breakdown of Fundamental Events for Beginners

Several macroeconomic reports are scheduled for release on Thursday, but they will all be similar in nature. Business activity indices for the services and manufacturing sectors for July will

Paolo Greco 07:12 2025-07-24 UTC+2

GBP/USD Overview – July 24. Trump's Tariffs: No One Will Be Spared

The GBP/USD currency pair also continued its upward movement on Wednesday, showing no reaction to the signing of a trade agreement with Japan. As we can see, even a form

Paolo Greco 04:02 2025-07-24 UTC+2

EUR/USD Overview – July 24. The Fourth Lucky One!

The EUR/USD currency pair continued its upward movement on Wednesday, and this time even the signing of yet another trade agreement couldn't save the dollar... So, Donald Trump signed

Paolo Greco 04:02 2025-07-24 UTC+2

The Trade Deal and Mike Lee's Lie

In my previous article, I asked: how is it possible that in a country which sees itself as a world leader in almost every area, the president can openly insult

Chin Zhao 00:53 2025-07-24 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.