Ella 
In early trading in Asia on Wednesday, GBP/USD rose slightly and was below the mid-range of 1.2600. Weaker-than-expected wage growth in the UK and continued geopolitical tensions in the Middle East have put some selling pressure on Pound Sterling (GBP), and the upside of GBP/USD may be hindered. GBP/USD is currently trading around 1.2636, up 0.05% on the day.
Data released by the Office for National Statistics (ONS) on Tuesday showed that the UK unemployment rate in November – based on ILO standards – remained stable at 4.2% in the three months to November, in line with market expectations. At the same time, the number of people applying for unemployment benefits in the UK increased by 11,700 in December, compared with an increase of 6,000 in November. Finally, the UK’s November ILO employment change data was 73,000, compared with the previous value of 50,000.
In addition, the annual average wage rate for the three months excluding bonuses in the UK in November slowed to 6.6% from the previous value of 7.2%. The average annual wage rate for the three months including bonuses in the UK fell to 6.5% from the previous value of 7.2%, which was lower than the expected value of 6.8%. %. UK wage growth slowed in the three months to November, bolstering the case for the Bank of England (BOE) to initiate interest rate cuts in the coming months.
On the other hand, rising geopolitical tensions in the Middle East have also provided some support to safe-haven assets such as the U.S. dollar. The United States once again carried out air strikes on missile facilities of the Houthi armed forces in Yemen. According to the U.S. Central Command, the United States launched the third military strike against Houthi armed targets because the four missiles posed a threat to commercial ships and U.S. Navy ships at any time.
In addition, investors reduced their bets on speculation that the Federal Reserve would cut interest rates following comments from Federal Reserve Governor Christopher Waller. Waller said on Tuesday that the central bank will be able to lower the target range for the federal funds rate this year, but should do so methodically and cautiously. Investors have put a 67% chance that the Fed will start cutting interest rates in March, according to the CME FedWatch tool. This, in turn, lifts the US dollar and acts as a headwind for the GBP/USD pair.
