GBP/USD Slides to 1.3475 on Weak UK Jobs Report, US CPI in Focus

GBP/USD Breaks Below 1.3500 as UK Jobs Data Disappoints Ahead of US CPI

Sterling Drops as UK Labor Market Shows Signs of Weakness

The GBP/USD currency pair continued its downward trajectory during Wednesday’s Asian session, dropping below the critical 1.3500 psychological level to trade around 1.3475. The move follows disappointing UK employment figures and growing expectations of sticky US inflation, which could reinforce support for the US Dollar (USD).

UK Unemployment Rises; Wage Growth Misses Expectations

According to data released by the UK Office for National Statistics (ONS), the ILO Unemployment Rate ticked up to 4.6% in the three months ending in April, in line with expectations but higher than the previous 4.5% reading.

The Claimant Count Change surged to 33.1K in May, compared to a revised -21.2K figure for April, sharply missing the consensus of 9.5K. Meanwhile, wage growth showed signs of cooling:

Average Earnings Excluding Bonus: +5.2% (vs. +5.4% expected)
Average Earnings Including Bonus: +5.3% (vs. +5.5% expected)

This deceleration in wage growth, paired with rising jobless claims, dampens the outlook for Bank of England tightening and puts pressure on the Pound Sterling.

US CPI and US-China Trade Developments in Focus

Investors now shift attention to the upcoming US May Consumer Price Index (CPI) report, due later Wednesday. Market consensus expects a 2.5% year-over-year rise, and any upside surprise may strengthen the Greenback, further weighing on GBP/USD.

Meanwhile, US-China trade tensions appear to be de-escalating after both sides reportedly agreed on a framework for implementing the Geneva Consensus. This has improved global risk sentiment and underpinned the US Dollar.

Technical Outlook

A break below 1.3470 could expose support levels at 1.3430 and 1.3400, while immediate resistance lies near 1.3520. Momentum remains with sellers unless a strong reversal follows the US CPI release.