UK Unemployment ticked up to 4.3% in the May-July period according to today's data, but the labor market remains hot, with wages rising further. Total weekly earnings jumped 8.5% and the highest in two years, affected by one-off payments by the NHS and the civil service. Excluding bonuses, wage growth steadied at 7.8%, which is the highest rate since comparable records began in 2001. 
Wages have been a constant headache for the bank of England and make its effort to contain inflation much harder. Today's data sustain pressure on policymakers for further tightening, ahead of next week's pivotal decision. But this theme is not easy to continue to support the Pound. The central bank has already delivered a massive amount of tightening and every hike increases the risk it may break something in the process.
The BoE has kept a non-committal stance, but Governor Bailey struck a dovish note last week, saying that it is "much nearer now to the top of the cycle" . At the same time, the Fed's higher-for longer-narrative has gained traction recently due strong economic data, benefitting the greenback. Markets price in a hold next week, but there is less conviction as to what happens after that.
GBP/USD runs its second straight losing month and tested crucial technical levels last week, provided by the 200DaysEMA and the 50% Fibonacci of the 2022 low/2023 high advance. It had a mixed reaction to today's hot labor report and remains vulnerable to 1.2307.
On the other hand, the BoE will have hard time staying on the sidelines next week, whereas its US counterpart is widely expected to pause. GBP/USD defends the aforementioned critical support cluster, which may give it the opportunity to recover, but will need strong catalyst for tackling the EMA200 (1.2660) and the upside looks unhospitable.
Investors not focus to Wednesday's US CPI inflation update, which can determine the next leg of the move.
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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