With the weakening of the labor market and the recovery of the US dollar, the pound/dollar exchange rate has fallen.

The GBP/USD exchange rate fell below 1.23

In the UK, the unemployment rate unexpectedly rose to 4.4%, while the number of employed people experienced the largest decline since November 2020. The number of job vacancies in the economy has once again decreased, indicating that the labor market may weaken.

The number of job vacancies in December decreased from 813000 in November to 812000, marking the 30th consecutive month of decline and indicating a potential weakening trend in the labor market.

However, in the three months ending in November, wage growth accelerated to the highest level in six months, reaching 5.6%, which is in line with expectations.

The Bank of England believes that wage growth is a key driver of inflation. Income growth remains strong enough to be incompatible with the Bank of England's 2% inflation target for average sustainable returns.

However, it is worth noting that given the unusually low data at this time last year, the wage increase is due to the base effect.

The market still expects the Bank of England to cut interest rates in February, and there may be one or two more cuts within the year.

Meanwhile, after Trump's inauguration speech, the US dollar rose after falling yesterday.

Trump stopped imposing trade tariffs on his first day in office, causing a significant drop in the US dollar. However, considering the basis of the US dollar, there are discussions regarding the trade tariff plan for early next month.

Considering the strength of the US economy and the lower likelihood of interest rate cuts by the Federal Reserve compared to other major central banks, the outlook for the US dollar remains strong.

GBP/USD Technical Analysis

The downward trend of GBP/USD can be traced back to the end of September. The price has rebounded from the multi-year low of 1.21 euros hit last week. However, the rebound encountered resistance at 1.2350, and the GBP/USD once again fell below 1.23.

Nevertheless, the hammer line pattern still points towards a bullish reversal. Buyers need to climb through 1.23 and 1.2350 to create a higher peak and move towards 1.25.

Encouraged by the long-term downward trend and RSI below 50, sellers will need to break through the support level of 1.22 to test 1.21 and create a lower low.