UK Job Vacancies Hit Three-Year Low; US Markets Brace for Potential Rate Cuts

In February, British employers advertised the fewest job opportunities in nearly three years, with a 15% decrease from the previous year, according to data from recruitment company Adzuna. This decline in job vacancies signals a potential ease in recruiting compared to the immediate aftermath of the COVID-19 pandemic when vacancies peaked at over 1.3 million. The Office for National Statistics also reported an 18% annual fall in job vacancies for the three months ending in January.

Despite the official jobless rate at 3.8%, Bank of England Governor Andrew Bailey welcomed what he referred to as full employment. However, the central bank aims to slow wage growth from the current rates of over 6% to exert downward pressure on inflation, which remains double its target.

The Bank of England Deputy Governor, Dave Ramsden, expressed concerns about persistent inflation pressures and stated the need for more evidence before considering changes in the bank's high-interest rates.

The Bank of England predicts that inflation will fall to its 2% target in the second quarter of 2024 but rise to around 2.75% later in the year. Investors anticipate interest rate cuts starting from August. The pace of sales decline for British retailers eased in February, and inflation measured its weakest point in nearly three years. Despite a recession in the second half of the previous year, January witnessed the most significant increase in retail sales in nearly three years.

In the United States, the dollar remained stable as traders disregarded durable goods data and awaited the Federal Reserve's preferred measure of inflation, scheduled for Thursday, for insights into potential interest rate cuts. U.S. consumer confidence retreated in February after three consecutive monthly increases, reflecting concerns about the labor market and domestic political uncertainties.

Consumers' inflation expectations in the U.S. fell to 5.2%, the lowest level since March 2020, contributing to the decline in overall consumer confidence. Orders for long-lasting U.S. manufactured goods experienced the most significant drop in nearly four years in January, signaling a loss of economic momentum. Business investment in equipment appeared to have eased, accompanied by weak data in retail sales, housing starts, and manufacturing production.

Despite attributing the economic softness to freezing temperatures and challenges in adjusting data for seasonal fluctuations, economists are not currently forecasting a recession for the year. Although there is an expectation that the U.S. central bank will initiate interest rate cuts this year, policymakers are signaling a cautious approach. Presently, markets reflect diminished expectations for rate cuts in March and May, with a 51% chance anticipated in June.

Data for Technical Analysis (1H) CFD GBP/USD

Resistance : 1.2676, 1.2678, 1.2681

Support : 1.2670, 1.2668, 1.2665    

1H Outlook  

Source: Investing.com

Buy/Long 1 If the support at the price range 1.2665 - 1.2670 is touched, but the support at 1.2670  cannot be broken, the TP may be set around 1.2676 and the SL around 1.2663, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1.2676 - 1.2681, TP may be set around 1.2685 and SL around 1.2668, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1.2676 - 1.2681 is touched, but the resistance 1.2676 cannot be broken, the TP may be set around 1.2668 and the SL around 1.2683, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1.2665 - 1.2670, TP may be set around 1.2660 and SL around 1.2678, or up to the risk appetite.       

Pivot Points Feb 28, 2024 03:01AM GMT