GBP/USD rises after jobs data supports BoE rate hike
GBP/USD is rising, supported by a weaker U.S. dollar and UK jobs data showing tentative signs of recovery in the labour market.
The unemployment rate fell to 4.7% in the three months to August, down from 4.9%, marking its lowest level since mid-2025. However, the number of job vacancies point to an economy moving sideways. After reaching 1.3 million vacancies after the pandemic, the number fell by 21,000 to 691,000 in the 3 months to September.
Meanwhile, payrolled employees rose by 13,000 in September, significantly better than the forecast decline of 26,000 and marking a second consecutive month of gains. This suggests some resilience in the labour market, although the broader picture remains mixed.
Wage growth also picked up to 3.7% in the three months to August, compared with the same period in 2025, extending the gradual recovery from a low of 3.4% earlier in the year. Expectations had been for an increase of 3.6%. The stronger figures could reinforce concerns among Bank of England policymakers that higher energy prices stemming from the U.S.-Iran war may feed into broader inflationary pressures.
A weak labour market had been one of the obstacles for hiking rates, but this appears to be easing.
A rate hike on November 5 is now almost fully priced in, with expectations for further tightening into next year beginning to build. This is offering support to sterling.
The main event is CPI data tomorrow, which is expected to show annual inflation rising to a nine-month high. Core inflation, which excludes more volatile components, is also expected to move higher. Another upside surprise could strengthen the case for further rate hikes and support GBP/USD.
Meanwhile, the U.S. dollar remains under pressure, tracking Treasury yields lower amid concerns over the sustainability of debt-funded AI investments.
Although U.S. tech stocks recovered overnight, with the Nasdaq finishing in positive territory, technology stocks in Asia have fallen as volatility continues.
The Federal Reserve is not expected to raise rates in October, with markets pricing in just a 17% chance of a 25-basis-point hike. However, a rate hike before the end of the year remains on the table.
The U.S. economic calendar is relatively quiet this week, with pending home sales due later today, followed by initial jobless claims on Thursday and PMI figures on Friday.
GBP/USD forecast – technical analysis
GBP/USD has broken out of a consolidation pattern above the 1.3200 support zone, pushing higher to test resistance at 1.3340, where the 50 EMA., horizontal resistance and falling trend-line resistance converge. The broader technical outlook remains bearish while the pair trades below this resistance zone.
Should momentum continue, buyers will look to break above the 50 EMA and falling trend line to expose the 200 EMA around 1.3400, which would make the outlook more constructive. Above here, attention turns to 1.3500 and 1.3560, with a break above the latter needed to establish a higher high.
On the downside, failure to retake the 50 EMA could see the price rebound lower, to support at 1.3280 before the 1.32 support zone.
Oil (WTI) rises to $100 amid an elevated risk premium
Oil prices are rising on Tuesday, with WTI reaching $100 a barrel and Brent trading at a five-month high of $110.
The risk premium in oil remains elevated amid concerns over supply disruptions in the Middle East. Threats to shipping through the Gulf remain a key driver of prices, with at least 18 vessels reportedly attacked over two weeks, keeping supply risks firmly in focus.
Yemen's Houthis have claimed fresh attacks on Saudi Arabian energy, airport and military targets, including the Aramco site in Yanbu and Riyadh's international airport.
The renewed attacks have heightened concerns over regional stability, with continued risks to energy supplies keeping oil prices above $100 a barrel. In the U.S., crude inventories are also expected to have fallen last week, potentially adding further support to prices.
Meanwhile, President Trump's shifting position on Russia-related U.S. sanctions and tariffs, including penalties for purchasing Russian energy, has added uncertainty to the supply outlook. Secretary of State Marco Rubio said officials wanted more time to evaluate the situation before making a final decision.
The prospect of additional Russian supply could provide some relief to the market, but for now, the immediate focus remains on the wider Gulf region and the risk of further disruption.
Oil forecast – technical analysis
Oil trades within an ascending channel dating back to early July. The price recently recovered from the lower band of the channel and the 50 EMA, rising to test $100, the psychological level.
Buyers, supported by the RSI above 50, will look to extend the move above $100 towards $105, around the 23.6% Fibonacci retracement of the move from $55 to $120. A break above here would establish a higher high and bring $115, the upper band of the rising channel, into focus.
On the downside, immediate support sits at $95, around the 38.2% Fibonacci retracement, ahead of $92.90, where the 50 EMA and lower channel support converge. A break below this area would weaken the outlook and bring $88 into focus, around the 50% Fibonacci retracement, followed by the 200 EMA near $84.
Below here, sellers could gain traction towards $80, the 61.8% Fibonacci retracement.
