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GBPUSD Price: Pound Rises to the Key 1.20 Level. What’s Next?

Simon Mugo trader
Updated 15 Nov 2022

The GBPUSD currency pair rallied past the 1.2000 critical level before falling back as investor risk appetite soared on expectations of a weak dollar going forward. The Fed’s strong warnings that it was not done hiking interest rates were largely ignored by market participants as the dollar continued falling against its peers.

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The mixed UK jobs report released earlier today also played a role in the pound’s rally. The number of jobless claims rose by 3,300, surprising analysts expecting a significant increase of 17,300 claimants. 

The UK’s average monthly earnings growth fell slightly to 6.0% from last month’s 6.1% figure but still beat analysts’ estimates of 5.9%. However, the unemployment rate ticked higher to 3.6%, much higher than the consensus estimate of 3.5%. The mixed employment report also boosted the British pound. 

The positive investor sentiment drove the pound higher even as market participants await the first Autumn forecast statement from the Rishi Sunak administration scheduled for Thursday. The markets expect the government to announce a series of budget cuts to reduce government spending combined with tax increases to shore up public finances. 

Thursday’s budget statement will be the first under Rishi Sunak’s administration, and many expect Chancellor Jeremy Hunt to present an extremely balanced budget. Hunt’s goal will be to appease the markets while at the same time appealing to British consumers who have been hard hit by the cost of living crisis in the country. 

The UK is headed for a recession, which puts the Finance Minister and the administration in a tough spot. The complex task for the Bank of England is to keep raising interest rates to tackle the record-high inflation while leaving room for the economy to recover as we head into a new year. 

Meanwhile, the market’s attention is on Jeremey Hunt’s upcoming statement on Thursday. 

*This is not investment advice. 

The GBPUSD price chart.

The GBPUSD currency pair was trading up 169.2 (1.44%) at writing as the pound rallied against the US dollar.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading