Cable makes the round trip on USD weakness and data questions

Cable has completed the round trip following a soft May jobs report.

Unemployment rose to the highest since 2020 and payrolls fell by 109K. That led to a quick fall to 1.3460 from 1.3535 but the pair has slowly recovered.

Some of the bounce is broader US dollar weakness and the pound is still the global laggard today by a decent measure but one of the reasons its rebounded is questions about the quality of UK data. The ONS has flagged data problems for months and may be unreliable.

Bloomberg last month highlighted turmoil at the agency with the head of the agency quitting after being brought in to fix problems.

The problems emerged inconspicuously, at first, when one day the monthly Labour Force Survey or LFS was delayed, and then quietly delayed again.
But nearly two years on from those first glimmers of crisis,
policymakers are still in the dark over a fundamental aspect of the
world’s sixth-largest economy.

Although the LFS was eventually reinstated, it remains plagued by the same accuracy concerns that prompted its suspension, and a modernized replacement that was supposed to be launched last year now won’t be ready
before late into next. In the meantime BOE officials are growing
concerned that more of the metrics they rely on to set policy will turn
out to be skewed, according to two people familiar with their
discussions.

In short, GBP traders and the Bank of England are flying blind.

The market sees just a 10% chance of a rate cut on June 19 but that’s up to 73% for the August meeting.

This article was written by Adam Button at www.forexlive.com.